Bitcoin is considered to as "digital gold." What is Bitcoin Gold, then? Let's find out in this article.
What Is BTG (Bitcoin Gold)?
A hard fork of Bitcoin called Bitcoin Gold (BTG) was developed in November 2017. A blockchain hard fork happens when a significant protocol update causes it to split in two. This change means that a token cannot exist on the previous blockchain, as it is incompatible with previous blocks. So, it requires a special blockchain of its own. As a result, the blockchains for Bitcoin and Bitcoin Gold are separate.
What Is Bitcoin Gold Used For?
Re-decentralizing Bitcoin was the original goal of Bitcoin Gold. By 2017, Bitcoin's consensus mechanism, proof of work, favored a small number of miners, so regular individuals and beginners didn't stand much of a chance of getting in on the mining action . In this sense, the system was becoming a little too biased and centralized.
On top of that, mining bitcoin requires highly expensive hardware. Bitcoin mining hardware is known as an ASIC (Application-Specific Integration Circuits) miner and can cost thousands of dollars. As a result, Bitcoin mining was a somewhat exclusive activity that you could only engage in if you had a massive amount of money to spare.
As a result, Bitcoin Gold was created to be resistant to ASIC mining. Instead, it might be mined using graphics processing units, giving average people the chance to mine. While not very cheap, GPUs are typically much more cost-effective than ASIC miners . While you can technically mine Bitcoin using a GPU, it's virtually impossible these days, which isn't the case with Bitcoin Gold. But is this the only difference between Bitcoin Gold and Bitcoin?
What Are the Differences Between Bitcoin Gold and Bitcoin?
The consensus mechanisms that Bitcoin and Bitcoin Gold use are one of their most distinct gaps. Since its founding in 2009, Bitcoin has relied on the original proof-of-work mechanism to protect the blockchain network from attacks. This mechanism involves solving challenging mathematical problems through mining.
Conversely, Bitcoin Gold uses the Equihash proof-of-work mechanism. In other words, this approach makes generating a proof far more difficult than verifying one. This brings us back to the fact that ASIC miners cannot be used to mine on the BTG blockchain because it is very challenging to build custom hardware for mining.
Given that Bitcoin Gold was created to combat the unfair mining issue, there aren't a huge number of additional differences between the two tokens. But Bitcoin Gold does have a smaller block size than Bitcoin, which generally leads to faster transaction speeds. However, Faster speeds can sometimes come with higher fees, which is a balance that can be difficult to obtain. And there is another glaring issue associated with this crypto.
Bitcoin Gold's Key Weakness
But there are issues with Bitcoin Gold. It is far more susceptible to 51% attacks because it is a smaller blockchain that uses a form of PoW mechanism. A cybercriminal or group of cybercriminals controlling more than 50% of a network's computer capacity is known as a 51% attack. In order to control the network, this is commonly achieved by renting hash power from a third party.
A 51% attack allows one to reverse transactions, stop them from being confirmed, and even double-spend tokens. Unfortunately, throughout the past few years, notably in 2018, 2019, and 2020, the Bitcoin Gold network has been subjected to a number of these attacks. It is therefore safe to say that it isn't the most secure blockchain available at this time.
How to Buy/Invest in Bitcoin Gold
Now you know "what is Bitcoin gold?". So, let's move the topic to "How to buy/invest in BTG?". BTG is not currently available on any centralized exchanges. You can find instances of it being traded on Bitfinex, HitBTC, and other decentralized exchanges, but US residents cannot trade on these platforms.
