Scheduled to be implemented on November 1st, Bitcoin Gold (also known as Bitcoin GPU), will be a hard fork in Bitcoin's blockchain. Currently, the Bitcoin network is monopolized by mining pools, and a few miners dominate the majority of the present hash power.
What is a Hard Fork?
A hard fork is when a blockchain diverges from the main chain, causing a new blockchain to be born. At a certain block, this separation occurs, and the new chain follows an alternative set of protocols.
What is Hash Power?
To mine a new Bitcoin block, miners get the data of the transactions needed to be verified, and they add a group of random numbers to it, called a "nonce". Miners then apply a mathematical formula to the data (hash algorithm), and they receive an output value called a "hash". If the hash satisfies the target, the block is successfully mined and sent out to the Bitcoin network; the hash can now be used to identify that block. Miners must modify the nonce and hash the data trillions of times per second, in hopes of finding an accepted input.
Hash rate relates to the number of calculations the Bitcoin network is performing at any given time. Coincidentally, hash power relates to the percentage of hash rate that is controlled by certain miners in the network. Click here to see the current distribution of hash power between miners.
ASICs
Back in the early days of Bitcoin, anyone could mine Bitcoins with a regular computer. Today, the mining industry is dominated by a select number of miners who require specialized hardware, called application-specific integrated circuits (ASIC). These ASICs do one job, and they do it really well - they mine Bitcoin.
Many people believe Bitcoin is being centralized because:
- ASICs are created by very few Chinese companies, like Bitmain, who charge hefty prices.
- The hardware companies offer poor customer support/service, and they usually keep the most powerful machines for their own mining enterprises.
- The current top 6 mining pools (displayed below) are managed in China.
- Chinese mining pool operators often act in similar fashion when it comes to implementing changes within the Bitcoin network.
About BTG
Jack Liao is the CEO of LightningASIC, a Chinese mining hardware producer, and he devised the idea of BTG in July. The project aims to combat the mining centralization spoken about above; hence, the slogan is: "Make Bitcoin Decentralized Again". Bitcoin Gold's coin will differ from Bitcoin by utilizing an Equihash mining algorithm which makes ASICs ineffective for mining. The algorithm allows anyone to mine the cryptocurrency with a basic GPU graphics card, similar to the early days of Bitcoin.
From btcgpu.org-
- Lead Developer is anonymous, goes by H4x3
- Project is open-source on github
- The Supply of BTG - 21 million
- New blocks will be mined roughly every 10 minutes
- Features replay protection (prevents accidental transactions)
- The team will be premining about 200 000 coins - meaning they will be taking a payout for their work.
How Do I Get It?
If you hold Bitcoin in a wallet with private keys, Bitcoin Gold can be thought of as a free dividend. BTG is distributed at a 1:1 ratio, so if you own 0.5 BTC, you will get 0.5 BTG... 0.0004 BTC = 0.0004 BTG...
A snapshot will be taken at Bitcoin block 491407. This means the chain won't hard fork at this block, but a record will be kept of every wallet holding Bitcoin at this block. Simply put, for whatever amount of Bitcoin you own at block 491407 on October 25th, you will receive an equal amount of BTG on November 1st, when the chain hard forks. Note, if you spend or buy Bitcoin after the snapshot block, this will have no impact on the amount Bitcoin Gold you receive.
WARNING - Not all exchanges will support the new chain! It is best to store your Bitcoin in a wallet.
If you do not own Bitcoin at the snapshot, you must trade, mine, or buy from an exchange to acquire BTG, just like any other cryptocurrency.
