After bitcoin endured a split back in August, creating the new Bitcoin Cash cryptocurrency, it happened again on Tuesday. This time, the aim was to create a new coin called Bitcoin Gold.
As before, the split—known as a “fork” in the industry—has led to two currencies (the other being the classic bitcoin, or BTC), each having the same transaction history up until the point of separation, where they went their own ways. And as before, anyone holding bitcoin at the time of the split should get the equivalent in Bitcoin Gold, for free.
As usual, the split comes with a degree of rancor. Soon after the Bitcoin Gold fork occurred, its website came under a distributed denial-of-service attack
The creation of Bitcoin Cash was intended as a solution to bitcoin’s scaling problems, so what’s the deal with Bitcoin Gold? The new version has a different goal: to re-decentralize the mining of bitcoin.
While bitcoin started out as something that many people could “mine”—with their computers racing against others to be the first to verify blocks of transactions—it can these days only be mined by someone with warehouses full of specialist equipment. This leaves the profitable activity in the hands of a relatively small group of players, and the people behind Bitcoin Gold (BTG) want regular people to be able to play again.
The forked Bitcoin Gold system will therefore use a different “proof-of-work” block-verification algorithm that’s friendlier to the kinds of graphics processing units (GPUs) that regular people can buy. The code for mining Bitcoin Gold will come out in November, at which point people can start mining the new coin, and those who had regular bitcoins on Tuesday will get the equivalent in Bitcoin Gold.
That is, if their exchanges and wallet services support the new cryptocurrency. Late last week, Coinbase said it won’t support Bitcoin Gold for now “because its developers have not made the code available to the public for review.”
Some, such as BitBay and Coinomi, have said they’re on board with Bitcoin Gold. Others are keeping a cautious eye on developments. One wallet service, Uphold, said it will “conduct an operational and security review of the new coin” once the code is out. “Once exchanges open to supporting BTG and the liquidity of BTG stabilizes, we will then provide updates when it will be offered for use on our platform and allocation of Bitcoin Gold to eligible members,” it said.
Time will tell as to whether Bitcoin Gold ends up being a significant player. In August, Bitcoin Cash started trading not much above $200 per coin, and at the time of writing it’s worth $327. Bitcoin itself has almost doubled in value over the same period.
That said, bitcoin took a bit of a dip following the Bitcoin Gold split, falling as low as $5,374 before recovering to $5,580 (at the time of writing). Some analysts have suggested this was because certain investors bought into the system just before the fork, in order to get as many BTG coins as they could when the fork occurred, then sold their bitcoins afterwards.