In 2017, Bitcoin has witnessed a lot of conversation about its forking into new cryptocurrencies. In August 2017, it was Bitcoin Cash (BCH) that forked away from the Bitcoin blockchain to create a new cryptocurrency. Later, the talk started for a new solution, called SegWit2x, which would create twice the block size in the new fork of the cryptocurrency. However, while the fate of SegWit2x would be decided later in November, the fork that came into fruition in October 2017 was called Bitcoin Gold (BTG).
While Bitcoin Cash and SegWit2x were scaling related forks aimed at increasing block size of Bitcoin blockchain, Bitcoin Gold aims to decentralize Bitcoin’s mining by implementing a new proof-of-work algorithm.
Upcoming Bitcoin Gold (BTG) Fork and ASIC Resistancy
Centralization of mining
According to many experts in the bitcoin and cryptocurrencies domain, while bitcoin was born as a decentralized entity, the current state of bitcoin mining is anything but decentralized. Bitcoin mining is in large parts centralized to a key spots in China. The aim of the Bitcoin Gold is to show how bitcoin can become as decentralized as possible.
The fork was initiated by Jack Liao, CEO of HK based mining hardware producer LighteningASIC. The project began witnessing a lot of support and traction since the first Bitcoin Cash fork in August 2017, until it finally happened on 25 October 2017.
The support for an ASIC-resistant fork led to the creation of Bitcoin Gold. The community believes that in the early years of Bitcoin’s release, it was truly decentralized as individual users were often also the miners.
However, the introduction of specific ASIC (application-specific integrated circuits) hardware has resulted in mining becoming relatively centralized to data centers operated in China – about 65 percent of Hash power comes from China.
High control with mining hardware manufacturers
While the mining of bitcoin witnesses some level of centralization, the ASIC hardware production is even more centralized, with only a handful of companies producing mining hardware and specialized chips.
The proponents of the new currency are of the opinion that as there are limited hardware producers, the mining equipment come at huge costs. This goes against the decentralized mining dynamics that bitcoin aims to achieve. It also suggests that the barrier to entry to the ASIC market is too high for it to become a free market.
Therefore, the developers behind the fork hope to bring mining back to individual users / participants by replacing the mining algorithm with one that it ASIC resistant. The developers aim to achieve this by making Bitcoin gold implement a new proof-of-work algorithm called Equihash, instead of bitcoin’s SHA256.
An experimentation with decentralization of mining
Bitcoin Gold is currently an experiment to see the kind of traction and interest the currency can achieve by giving power back to individual users.
There are several reasons why cryptocurrency users and enthusiasts might support the idea / concept:
- ASIC mining hardware is expensive.
- ASIC mining manufacturers have too much of an influence / monopoly.
- Bitcoin mining is largely centralized in China.
- Bitcoin mining is being done at data centers managed by professionals, rather than at individual homes.
While it is still an experiment, only time will tell if the concept becomes a worthwhile idea to implement to the bitcoin, or withers out as a figment of imagination.