What is Bitcoin Gold & How Does it Work? - BTG for Beginners
Bitcoin Gold (BTG) was launched in 2018, and it aimed to make up for the limitations of Bitcoin, which provided a platform for its introduction. In effect, Bitcoin Gold is a hard fork of Bitcoin, meaning that it was created by spinning off some existing blocks of the Bitcoin blockchain for independent governance. It has ceased all links to the Bitcoin blockchain since then, assembling its team of developers that has grown to over 20 members at present.
It has delivered on some of its promises by delivering faster processing times than Bitcoin and introducing full anonymity. Hang Yin led the development team of Bitcoin Gold consisting of 6 co-founders and leveraged the open-source technology to birth the blockchain. To access BTG, one requires internet connectivity so that you can send or receive it.
As a virtual currency, it's not subject to bank issuance or restricted by the monetary policies of the Federal Reserve or Central Bank. The control of the blockchain is vested in the community members and the Board.
Why Was Bitcoin Gold Invented?
Bitcoin Gold was introduced at a time when Bitcoin already existed. However, the major goal was to leverage the existing blockchain while introducing full anonymity and expediting transaction time by reducing block size. The promoters felt that Bitcoin was too slanted to favour major miners. It was more akin to handing out just the short end of the stick to small, day-to-day miners without expensive mining equipment. This was considered to be a disservice to the democratic access that the blockchain philosophy was founded on.
Like Bitcoin, Bitcoin Gold serves as a currency and offers a platform for cryptocurrency improvement, research, and transactions. It also serves such purposes as:
- As settlement for goods and services
- As an investment accessible on digital assets’ marketplaces
- As an enabler of independent payment mechanisms like other cryptocurrencies.
How Does Bitcoin Gold Work and What Technology Is Behind It?
The Bitcoin Gold ecosystem is driven by the Equihash proof of work algorithm, which links block output to the memory available for storage. Effectively, ASIC machines were put at a disadvantage from the onset of Bitcoin Gold as custom modifications will be required at intervals to keep up with the updates to the algorithm.
In simple terms, the machine might not have delivered its expected ROI before it is rendered obsolete, and no longer fit for purpose. Smallholder hardware miners are projected to be the big winners, meaning that the blockchain and its reward system will remain democratic and decentralized.
With the Bitcoin blockchain being primarily open-source and technology-driven, room for transparency and decentralization is provided, making it a community project. Compared with other cryptocurrencies, it bears a semblance to Monero in terms of anonymity. It differs from Ethereum and Bitcoin, which are both known to publish transaction details via their respective explorers. This is a point of departure for Bitcoin Gold, which does not reveal actual wallet addresses.
Is Bitcoin Gold Real Money?
Bitcoin Gold offers many people around the world an equitable platform with its blockchain and serves as a payment enabler and a means to transfer value. So, BTG ticks some boxes when compared to fiat money, but it is digital and not physically exchangeable.
In terms of the definition of a legal tender, BTG will certainly not fit in, but this is not a low point. On a day-to-day basis, while BTG like most digital coins has no institutional backing proclaiming it as national or international currencies, marketplace realities have conferred recognition and value on them. So, in over 100 countries today, BTG is accepted for settling accounts or paying for goods and services. Therefore, it satisfies all the criteria and purposes of real money.
Fees & Expenses
BTG charges a mining fee of 0.5% for transactions on the network. This rate is considered almost insignificant by many people especially if your transaction is of high value. Outside of the network fee, when buying the coin on exchanges or from brokers, expect some additional fees to result. The fees here will depend largely on the payment method you are using. Credit card payments range between 3% to 7% while wire transfers can attract between 0.25 and 0.5%. For investors who prefer bank transfers, the charges will be variable as international payments will attract higher fees than one done within the same country. In all, these fees are small and almost unnoticeable.
What Are the Benefits of Bitcoin Gold?
Bitcoin Gold is a lot like Bitcoin except for a few distinguishing features. These are the leading benefits:
Fungibility — 1 BTG is equal to 1 BTG at any time. As a fungible digital currency, BTG is identical, replaceable, and convertible.
Decentralisation — It operates a consensus algorithm, and this makes it decentralized, and community-driven.
Faster Transactions — It makes for faster transactions as a result of its enhanced design. While Bitcoin is thought to produce about 5 Transactions Per Second, Bitcoin Gold is reported to be up to 27 TPS.
Anonymity — Like Monero, it employs full transaction anonymity, shielding the wallet addresses of senders and receivers on the network.
Can Bitcoin Gold Be Used Anonymously?
BTG offers transaction anonymity. However, if you buy BTG using a regulated network, the platform will be able to tell how many BTG you acquired and when. Likewise, if you choose to buy Bitcoin Gold from any open marketplace, only the person who transferred the BTG to you can tell what you were given. Outside of the above exceptions, BTG can be used anonymously with no one able to tell if you sold your holdings or sent the same to anyone. The in-house explorer does not show the wallet identities of parties to a transaction, which is masked with the use of encryption and representative symbols. When a party sends BTG to another, the final delivery does not indicate the wallet of the sender, nor is the sender given the actual wallet address of the receiver. In both cases, an encrypted address is used, which the network generates for the purpose of validation and verification.
How Safe Is Bitcoin Gold?
It can be considered as safe as cryptocurrencies should be. This derives from the use of encryption methods when relaying wallet addresses and transaction reports. The issuance of network updates, as well as outrages to algorithms, also increases platform safety. That said, personal security is important as hackers can infect PCs with malware using a number of methods in order to compromise your wallet if stored thereon. While this risk is not exclusive to BTG alone, it is important that safety measures are in place by the user at all times. You can and should have an antivirus installed. Shared computers should be avoided when logging into your crypto wallet and try as much as possible to keep your coins off exchange wallets except if you are actively trading at the time. A hack or system failure can expose you to the risk of losses.
What Teams Are Working On Bitcoin Gold Development
Jack Liao is the present team leader of developers and works with a group of more than twenty active developers across the globe. The team comprises the co-founders as well, who takes command of the Board on a rotational basis. They work with other tech experts who are also making their mark on the crypto scene.
Lightning Network has been working to improve the scalability and ease of use of Bitcoin over the last two years. The introduced LN apps have largely helped to improve Bitcoin access and transaction pace for a couple of merchants. With the close similarities in the underlying technology of Bitcoin and Bitcoin Gold, the latter will benefit from further improvements in the Lightning Network.
Which Financial Institutions Are Invested in Bitcoin Gold?
There is no major financial institution with stakes in Bitcoin Gold that has so far been identified. That said, the market for cryptocurrency is huge with an overall market cap of $266 billion. And BTG trading generates a daily turnover of over $36 million, boasting a market cap of $159 million at the time of writing. The entry of new trading platforms each day into the cryptocurrency market is deepening the opportunity for BTG trading around the world. There are over 22,000 trading markets for digital coins at present, and these provide a viable outlook that investors will appreciate.
Bitcoin Gold Mining
Bitcoin Gold uses the Equihash Proof of Work algorithm, designed to link the capacity for output to the capacity for storage or memory. PoW traditionally imposes some workload on miners in order to safeguard the network, so that miners will incorporate their processing power to produce a solution as to the required mathematical difficulty. Equihash uses RAM size as a point of departure so that smart mining machines will not override the interest of the community.
While a few ASICs might have emerged with custom-RAM, the use of updates eventually makes it illogical for them to be used in mining BTG. The reason for this position is economic. If an ASIC is sold for $5,000 and before the owner can generate that amount, there is an update that invalidates its custom memory, then it is obsolete, and a retrofit will be needed. Expending more funds to make the ASIC align with new requirements will make such machines too costly to adapt.
In a sense, BTG seems to have the answer when curtailing the excesses of industrial block miners who pose a threat to the democratization and decentralization of the blockchain ecosystem.
Bitcoin Gold Wallet
The Bitcoin Gold wallet is designed as the requisite storage for all Bitcoin Gold tokens. They are of different types:
- Atomic BTG - Desktop
- Exodus - mobile wallet
- Freewallet - web-based wallet
- Guarda - Web/mobile wallet
- Amon Tech - mobile wallet
In terms of security, hardware wallets are commonly recommended. Trezor and Ledger Nano S come up as the leading options here.
Is Bitcoin Gold Worth the Investment?
The main reason for any investment is to make more money, and this is reported by many analysts as a part of the success story behind Bitcoin Gold. While the project might not have witnessed several groundbreaking developments throughout 2019, the response it generates along with other cryptocurrencies in price increases and volatility is commonly referenced as a point of interest.
However, it’s important to note that all investments come with risk and there are no guarantees when it comes to returns. As an investor, it is important to pay attention to the details that underlie an investment as this will enhance your decision making. Beyond this, for investors who plan to buy and keep their BTG, it is also worthwhile to understand the best storage options available.
All digital coins are not necessarily compatible with every wallet out there. The right storage for BTG is available, and with enough options to choose from, picking the best fit will be simple with the information provided here.
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Frequently Asked Questions
There have been Bitcoin Gold price peaks and lows in the last one year that offer a chance for profits but remember like any other investment there are no guarantees.
Yes. Altcoins and Bitcoin can be used to buy BTG on any platform.
Yes. The market for BTG is global and therefore widely accepted.
Yes. It is among the leading investments that many brokers avail to their clients.
BTG hit an all-time high of $539.72 in 2017.
Yes. Many platforms are open to the sale and trading of BTG.
Trezor and Ledger Nano S are commonly mentioned.
No. Bitcoin Gold is not hosted on the Ethereum blockchain. You should use compatible wallets only.