As block 491,407 was reached towards the end of October 2017, the world was given yet another Bitcoin alternative; Bitcoin Gold.
This one would be going by a different name, Bitcoin Gold, but still from the same original blockchain as the third largest coin by market capitalization, Bitcoin Cash.
While similar, the two Bitcoin alternative blockchains were created for different reasons. Bitcoin Cash was designed over a debate around block size. Many said the 1mb limit that only allowed 4.4 transactions a second was slowing down the network and severely hurting the platform’s prospect of scalability and use by the “common man.” Bitcoin Gold, launched at the end of October, it was created to break up consolidated mining power, rather ironically, plaguing Bitcoin, the platform that created the blockchain so often associated with decentralization. Many on the platform felt that the large consolidated block of miners sometimes referred to as “mining cartels” were exerting undue influence on the platform.
The development team of Bitcoin Gold sought to change this consolidated power through perhaps the only way they knew how, a proposed change to the blockchain. The most significant difference may be that Bitcoin Gold will be able to be mined by general processing units (GPU) like the kind in your average laptop, but not by ASIC like the kind used in mega-mining operations. For the average miner, before Bitcoin Gold, there was according, “a gap of profitability due to the addition of new hashrate to the network, the parameters are altered, and it is difficult to generate a reward.” By allowing the coin to be mined by GPUs, the development team behind Bitcoin Gold opens up the number of available mining machines and hopefully, breaks up the mostly consolidated mining effort within Bitcoin.
With the success of Bitcoin Cash – creating a multi-billion dollar coin seemingly overnight, many assumed that Bitcoin Gold would follow a similar or perhaps even better fate, considering Bitcoin Gold’s backers and developers seemed more impressive (like Jack Liao, Chief Executive Officer of the mining manufacturer LightningAsic and Bitcoin news portal Jinse.com).
Of course, the worst case scenario of a Bitcoin fork was still possible; that being of course, that the coin collapses, leaving virtual millionaires penniless. But with the fork that created Bitcoin Cash, that didn’t happen. Instead, the opposite did – Bitcoin soared to new highs, causing even skeptics to give it a second chance. Many hoped maybe Bitcoin Gold could repeat the same feats. Though it’s achievements were impressive, it still paled to Bitcoin Cash. Bitcoin Gold has a market capitalization of $3.6 Billion, about 1.5% of Bitcoin’s market capitalization. This is not as impressive as Bitcoin Cash, which has a market cap closer to 10% of Bitcoin.
Bitcoin Gold was created through a hard fork. The alternative blockchain activated by the miner or user creates an alternative blockchain no longer compatible with the original Bitcoin blockchain as opposed to a soft fork, where an older version of the protocol would still be consistent with the newly updated ones. A hard fork is how Ethereum Classic was created. Those who owned Bitcoin were given Bitcoin gold, opening up the market for trading platforms.