The trouble began earlier this year when a group of cryptocurrency upstarts cloned Bitcoin to create their own version, called Bitcoin Cash. The split, called a “hard fork,” came after a long and acrimonious disagreement about how to get Bitcoin to handle more traffic failed to resolve amicably. Now, another group of Bitcoiners wants to create yet another version of the world’s most popular digital money on October 25. They’re calling it Bitcoin Gold.
Bitcoin Gold is taking aim at democratizing Bitcoin’s lucrative infrastructure layer—”mining”—taking it out of the hands of giant firms and into the purview of at-home enthusiasts. The project was co-founded by Jack Liao, CEO of Hong Kong-based Bitcoin mining company LightningASIC, Bitcoin Gold’s anonymous lead developer “h4x3rotab” told me. (LightningASIC also just so happens to sell the hardware this new market of miners will need.) The fork mainly seems to be a reaction to widespread ire directed at one Bitcoin mining giant in particular, China-based Bitmain. Bitmain was an important player in the Bitcoin Cash fork.
“The current situation, where one erratic company in a totalitarian jurisdiction that is very hostile to Bitcoin has near monopoly domination over the manufacturing and distribution of the mining hardware that is required for the security of the global network, is unacceptable to anyone who understands the importance of decentralization to Bitcoin,” hx3rotab wrote me in an email. Hx3rotab also told me that he is based in China.
Bitcoin Gold is different from Bitcoin Cash and yet another upcoming fork—“Segwit2x,” scheduled for November—because those versions address issues related to speeding up the Bitcoin network to handle more traffic. Bitcoin Gold is instead looking to cut more people in on the mining industry’s profits.
Miners are people who build computers solely dedicated to crunching numbers in an effort to “solve” a block of data and receive a reward in cryptocurrency. These blocks are chained one after another to make up the blockchain, Bitcoin’s ledger technology. In the early days of Bitcoin, anyone could mine the currency on their home computer. But since then, Bitcoin’s hashing algorithm has been monopolized by specialized, powerful mining chips called ASICs and large mining firms. It’s a multi-million dollar industry.
Bitcoin Gold will, if it materializes on October 25, switch out Bitcoin’s algorithm for another called Equihash that is, well, more equitable. It’s a “memory-hard” algorithm, which means common home computer hardware like GPUs will be able to profitably mine Bitcoin Gold for the foreseeable future. Because they have different mining algorithms, “Bitcoin Gold is not a competitor of Bitcoin,” h4x3rotab wrote.
Bitcoin’s next-most-popular competition, Ethereum, currently allows GPU mining but will eventually be moving to a new mining scheme, so there will be a whole lot of GPU rigs out there just looking for cryptocurrency to mine. Bitcoin Gold will, if all goes according to plan, be there for them.
There are some potential red flags. The first is that there is essentially no technical information about Bitcoin Gold anywhere on the internet. Not on the project’s website, not on its GitHub, and not in its Slack channel. That’s unusual, considering it’s supposed to launch in under a month. The team has also not yet deployed a “testnet” to safely test the network, h4x3rotab wrote, but it should be coming soon.
Bitcoin Gold will also have the same address format as Bitcoin Cash and Bitcoin, which could be very confusing. There have been reports of people unwittingly sending their Bitcoin Cash to Bitcoin addresses, losing it forever. This problem will only be compounded by yet another incompatible cryptocurrency using the same address format. Bitcoin Gold has a plan to introduce new address formats for the fork, h4x3rotab said, but that will come after launch and they will have to first entice users to migrate over to the new format.
Still, none of this necessarily precludes Bitcoin Gold from getting off the ground. Forking code is easy—it’s getting people on board that’s the hard part. Since Bitcoin Gold is a fork of Bitcoin, anyone holding Bitcoin at the time of the fork will receive a mirror balance in Bitcoin Gold. The promise of free money may be enough to draw the needed interest.
On October 25 there may be three versions of the world’s most popular and valuable cryptocurrency: Bitcoin, Bitcoin Cash, and Bitcoin Gold. Then, in November, another scheduled split will likely create a fourth version, which is currently only known as “Segwit2x.” This fork could soon be… a rake?
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