Topics Blockchain
Bybit Learn
Bybit Learn
Intermediate
Apr 1, 2022

Bitcoin Gold (BTG): Affordable Blockchain Mining

We’ve all heard of Bitcoin (BTC) … but have you heard of Bitcoin Gold? Although Bitcoin is highly versatile and applied in many areas, its capabilities are not enough to power certain functions and opportunities, and its limitations affect the long-term health of the Bitcoin network.

Developed to make up for Bitcoin’s limitations and (surprising) lack of decentralization, Bitcoin Gold was the result of a hard fork of the former. In simpler terms, it was created from the existing Bitcoin blockchain, but has since separated itself to stand as an independent entity.

Since its separation, the Bitcoin Gold developers team has grown to over 20 strong. One of the primary aims of Bitcoin Gold is to become better than its parent blockchain, offering faster services, a wider range of applications and greater functionality. Bitcoin Gold has become an asset that generates a trading volume of about $15 million daily and is currently valued at around $32 per BTG, its native token.

What Is Bitcoin Gold?

At its beginning, Bitcoin Gold’s aim was to provide a cryptocurrency similar to Bitcoin, but which was truly decentralized for miners. This caused a Bitcoin hard forkand theEquihash proof of work (PoW) consensus for mining (which favors GPU mining) to be adopted. Unlike Bitcoin, which uses an application-specific integrated circuit (ASIC) for mining, Bitcoin Gold runs on a GPU (graphics processing unit). As GPU mining can be done with common digital devices, more people can participate in the network, making it more inclusive than Bitcoin.

Bitcoin Gold is extended by Lightning Network, a Layer 2 solution which is scalable and can process an unlimited number of transactions per second (TPS). Bitcoin Gold was created to encourage blockchain developers to create applications by providing a platform with the speed, capacity and interoperability needed for seamless operations.

Recently, Bitcoin Gold has started shifting its focus from being a mere “copy coin” with decentralized mining to expanding its usefulness for everyone, starting with interoperability. It therefore underwent a series of tweaks to make sure that it’s compatible with the best smart contract protocols in the blockchain ecosystem. 

What Is BTG?

BTG is the native token of the Bitcoin Gold network. Just as BTC runs on the Bitcoin blockchain, BTG is the utility token that serves many purposes in the Bitcoin Gold blockchain (its use cases are discussed below).

What Is BTG Used For? 

The main plan for Bitcoin Gold was to utilize the Bitcoin blockchain — but completely change the algorithm by which coins are mined — to enable more participation and decentralization. While BTG retained the use cases of Bitcoin, it also picked up new ones along the way. Bitcoin Gold is used as:

  • Open-source bridges for applications

  • A medium of exchange during transactions

  • Rewards for mining

  • An  investment asset

How BTG Works

As mentioned earlier, Bitcoin Gold works by using the Equihash PoW consensus mechanism, which links block output to the available memory for storage. To understand how BTG works, we must first grasp two concepts: Equihash PoW consensus and GPU mining.

Zcash-developed Equihash was designed from the outset to be an ASIC-resistant PoW algorithm. This was accomplished by making it a memory-hard algorithm — an algorithm that requires 700MB–3GB of RAM to run (unfortunately, it doesn't work on hardware with less memory). When creating an ASIC, it’s expensive to add extra storage: the more memory you need, the costlier it gets … even to the point where it’s impossible to profit. The need for memory is where GPU mining comes in.

GPU mining allows a typical gaming computer's GPU to be used to solve difficult math problems and verify electronic transactions on a blockchain. These GPUs have large capacities and are easily accessible on regular laptops or desktops with the appropriate graphics card, making them compatible with the Equihash protocol.

BTG works with the Equihash PoW consensus, which that requires memory, and GPUs that have the corresponding memory power readily available in the hands of the majority, to create a more decentralized mining experience and secure platform for developers and applications. In a way, it also curtails the excesses of industrial miners who might pose a threat to the decentralized system.

Key Features

A New and Different Mining Algorithm

Bitcoin Gold uses the Equihash algorithm to mine new blocks and transactions, unlike the SHA-256 algorithm adopted by Bitcoin. Although both are PoW algorithms — requiring miners to solve complex cryptographic math problems to mine a block — Bitcoin miners have the advantage as they use expensive processing equipment, such as ASICs.

Not to be outshone, Bitcoin Gold provides an equal mining opportunity to all, which is arguably closer to Satoshi Nakamoto's vision of "one CPU, one vote."

Replay Protection

A typical problem with any blockchain fork is transaction replay. A replay is a risk, because both the original and newly branched blockchains have the same transaction histories. Malicious actors can use this vulnerability to replicate the same transaction from the primary blockchain to the forked one to receive twice the cryptocurrency. Bitcoin Gold blockchain implements replay protection that renders one blockchain's transactions invalid on the other.

Bitcoin Gold (BTG) vs. Bitcoin

The major difference between Bitcoin Gold and its predecessor, Bitcoin, is in their mining algorithms. While they run on the same consensus mechanism (PoW), Bitcoin uses ASIC, a specialized device mining method, to verify transactions. This model creates autonomy for a select group of individuals who can afford it.

On the other hand, Bitcoin Gold’s mining process accommodates the GPU mining system, allowing a wider number of people to access the network. It also makes the validation network more vast, thus contributing to a stronger hedge against a possible 51% attack.

Another major difference between Bitcoin and Bitcoin Gold is their respective adoption rates. While they belong to the same family, Bitcoin Gold’s adoption rates are far lower than Bitcoin’s, with Bitcoin’s market cap higher than Bitcoin Gold’s by over 100 times as of this writing. This gap results from both the difference in the value of each coin, and in each one’s global acceptance. 

In terms of investment, Bitcoin is more advanced than Bitcoin Gold, having hit several all-time highs, a status which BTG hasn't attained. To be fair, Bitcoin Gold is still in its infancy, while Bitcoin has been around since 2009.

BTG Tokenomics

Bitcoin Gold has a total supply of about 17.5 million tokens, all of which are currently in circulation. One BTG is currently trading at about $32, and BTG’s all-time high (ATH) of $539.72 was recorded on Oct. 23, 2017.

30% of the tokens went into the blockchain development and project, while 15% were set aside for ecosystem support and development. Another 15% were distributed to the community as airdrops and rewards, 20% were reserved for yearly expenses, 7% were reserved for bounties and collaborations, 5% went to the founding team, and the remaining 8% went to the covering of costs and community development.

Pros and Cons

Pros

Decentralization: Due to the Equihash model employed by the developers, the validation process is spread out, thus making the network both harder to control and harder to attack. 

Diversification of portfolio: Bitcoin Gold has a unique mining algorithm that may have more use cases in the future. This makes it more unique than other cryptocurrencies, and helps users to diversify their portfolios. 

Inclusion: Bitcoin Gold's mining algorithm, which is compatible with GPU mining, has made room for more people to participate in the mining process and earn rewards. This inclusion exemplifies Satoshi Nakamoto’s idea of decentralization Nakamoto strived toward when they created Bitcoin.

Cons

High volatility: One reason many people are discouraged about adopting Bitcoin Gold is its roller-coaster fluctuation in price. So far, BTG has seen an ATH of about $540, and in early 2021, its price plummeted to about $10. This volatility has understandably and negatively affected the token's reputation as a stable store of assets or medium of exchange.

Low adoption rate: Many would rather adopt Bitcoin than Bitcoin Gold because they regard the former as more familiar. Also, it makes more sense to adopt Bitcoin than Bitcoin Gold because it has a higher market cap, and it's more stable. 

Is BTG A Good Investment?

Having a good return on investment (ROI) is the main reason for any investment. According to some analysts, a part of Bitcoin Gold's success is resting on its ROI. Although Bitcoin Gold may not have experienced the kind of ATHs and adoption rate that Bitcoin has, its fluctuation in price is still regarded as a positive point of interest. 

Bitcoin Gold’s road map for 2022 focuses on scalability and interoperability between blockchains. The changes and upgrades being made to the network reflect the future potential of the BTG token in value and adoption, and from what we can see, it has a lot of potential. It completely solves the scalability issue affecting the Bitcoin mainnet.

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’s important to pay attention to the details that underlie an investment, as they’ll help guide you toward your decision.

Buying BTG

BTG tokens can be bought on several crypto exchanges. Here’s how you can buy BTG on Bybit.

Step 1

Create a Bybit account. Visit the official Bybit exchange website and click on Sign Up. Enter the details requested, and complete the quick verification process. 

Step 2

The BTG token is paired with USDT on Bybit. Therefore, you must hold USDT in your wallet to purchase Bitcoin Gold tokens. You can transfer your tokens from an external wallet or a wallet from any cryptocurrency exchange, or you can buy USDT on Bybit in a few clicks. 

Source: Bybit |BTG/USDT

Step 3

Visit the Spot Market section on the exchange and search for the BTG/USDT pair. You can place your orders using a Limit, Market, or Conditional order on the extreme right of your screen. If you’re using the Limit order (which we recommend), enter the price of BTG at which you want to buy the asset and the quantity of USDT tokens you want to spend on the purchase. Once your order gets filled, the BTG tokens will be transferred to your Bybit spot wallet. 

Step 4

Securely store your BTG tokens in a hardware wallet. If you intend to trade BTG and profit from its price fluctuations, you can use the exchange's hot wallet. However, we do not recommend storing large volumes of tokens in an exchange wallet — consider using cold storage instead.

Closing Thoughts 

In the long run, Bitcoin Gold (BTG) will intensify its focus on smart contracts and blockchain democracy in order to develop a truly decentralized cash-crypto brokerage network. Its primary development areas of focus include interoperability, applications, infrastructure, and the Lightning Network. Bitcoin Gold has plans to work bi-directionally with other blockchains and ecosystems, indicating that the bridge to the Phala Network is in progress. Put together, all of these factors shine a favorable light on where Bitcoin Gold is headed.