Dumping Bitcoin forks: Bitcoin Gold

The second most prominent Bitcoin fork was created about three months after Bitcoin Cash, which I wrote about in previous part of this series. If BCash wanted to solve the capacity problem by increasing block size, Bitcoin Gold (BTG) tried to “democratize” mining. The financial interests of their creators might also have played a tiny bit of a role in creating them, I suspect.

If you haven’t done so yet, please read the Safety notice part in my introductory post to this series.

http://bitcoingold.org

Origins

After the relative success of Bitcoin Cash, the team behind Bitcoin Gold apparently saw an opportunity and grabbed it. They followed pretty much the same path as Bitcoin Cash, but changed different part of the protocol. At least they went about it in a clean way and implemented replay protection and different address format.

As a side note: whenever you see a “team” on a cryptocurrency website, you know you should run away, because it’s clearly a for-profit enterprise and most likely a scam. True decentralized currencies do not need a public face and in fact they do best because there is no public face to them.

So what’s different in BTG? It’s the proof-of-work algorithm. I am sure you are aware, that the Bitcoin blocks are created by miners and the way the blocks are created involves solving a hard mathematical problem. Not going to go into too much detail here, but in case of Bitcoin, it’s trying different nonces (random initialization values) and computing a SHA hash. The miners are looking for a nonce which will produce a hash with certain characteristics. Computing SHA hash is fairly simple operation which can be performed using next to no memory and thus is ideally suited for parallel computation. These days, serious Bitcoin mining is done exclusively by ASICs. These are massively parallel special single-purpose chips, not very different from GPUs in your gaming machine. Same as GPUs, they are very good at performing simple operations requiring limited memory very quickly in parallel.

Buying and running farms of these ASIC chips is expensive, both financially and logistically, so it’s mostly done by larger companies and is pretty much non-existent at home or at small scale. This leads to one of the criticisms of Bitcoin — that the mining is not as decentralized as was envisioned by Satoshi and his disciples. I do not agree with this, because the same situation exists in most areas of human endeavor. Take actual real gold mining for example. At the beginning it was done by individual tough guys with shovels and pans in Klondike. These days, it’s a massive operation involving heavy machinery and lot of chemicals. Can everybody do it now? Definitely not. Can you say it’s centralized? Also definitely not, because many large but independent miners operate and compete on the cost.

Getting back to BTG, it tried to “solve” this problem (as if it needed solving) by using a different PoW algorithm called Equihash. It was first published in a paper by Alex Biryukov and Dmitry Khovratovich from Luxembourg University in 2016. They claim their algorithm is GPU and ASIC resistant, by requiring large amounts of memory for efficient operation. As memory on the GPU and ASIC chips is very limited (per-core), general purpose CPUs are much better suited for computing Equihash. And because the world is full of general purpose CPUs, the idea is, that everyone will be able to run a miner on their laptop, thus democratizing the mining process. At least in theory.

BTG is not the only one using Equihash. ZCash (ZEC) was probably the first one to implement it.

The fork took place at block height 491407 on October 24, 2017. It was a clean 1:1 fork and implemented replay protection with address format

So is BTG better in any way that Bitcoin? Of course not. Still a shitcoin. And where BCash has at least some merchant support, I have yet so see any real-world use for BTG. But hey, don’t look the gift horse in the mouth, eh?

Claiming

As BTG was only the second fork, the developers were not yet completely fed up with them, so claiming it is probably as easy as BCH was. In fact, I got mine exactly the same way, but using the tools provided by Trezor. Safe and easy. Ledger has you covered as well. In case you have of these two and you do not plan to claim any other forks, you can even keep your coins in the same Trezor/Ledger.

If you did not have Bitcoin in Trezor or Ledger, you can follow pretty much the same instructions described in this Bitcointalk post I linked to earlier. Just mentally replace BCH with BTG. Make sure you move all coins from the previous wallet, before you do anything.

And again, if you do not want to mess with this yourself, there is a service which will do this for you for a 10% fee, called Walleting Services. Same precautions apply. Move all your coins from the old wallet before using it.

Dumping

If you had some weird reasons for keeping BCH, I hope for your sake you will resist such urge with BTG and do the smart thing. That is, exchange it for Bitcoin.

Your choice is more limited than in case of BCH, but there is enough places you can dump it. I sold mine again on HitBTC, since there was not much choice back when I claimed it in November, but these days it’s supported on semi-legit exchanges like Bitfinex and Binance. Use Coinmarketcap website to see which exchanges you can use.

Another option is using Shapeshift or Changelly service. These services are integrated into Coinomi wallet for example, so you should be able to exchange it directly in the app. I have not tried it yet, but I hear it works fine. You’ll probably get a bit worse rate than on the exchange, but given the relative low value of BTG, it’s probably not much difference.

The usual security notice follows: After exchanging for BTC, move your coins off the exchange immediately into a respectable wallet you fully control. If you do not hold the private keys, it’s not your Bitcoin.

Final verdict

I was able to get about 1,5% of Bitcoin from BTG. These days, you can expect around 1,3%, so it looks fairly stable (to my surprise). Is it worth it? You decide. It will probably depend on how much Bitcoin you had and how much free time you have on your hands.

If you have Trezor, claiming is easy. If you don’t, you can take the easy route by following this simple 10-step program:

  1. Prepare your wallet seed and empty the wallet into a fresh one, if you haven’t done that already.
  2. Go to a pub and take your phone and seed with you.
  3. Order a beer.
  4. Get Coinomi installed and generate BTG address.
  5. Use the above mentioned Walleting Services, paste in your (now empty) seed and the BTG address.
  6. Order another beer. You can also talk to your friends in the mean time (optional).
  7. After you get the BTG coins, use Shapeshift in the Coinomi app to get Bitcoin.
  8. Have one final beer.
  9. Pay for the beers with the Bitcoin you just gained. Or, if the pub does not accept Bitcoin (yet), get one of your friends to pay for them and convince him or her to take Bitcoin in exchange.
  10. Go home.

Disclaimer: You should have had at least 0.05 BTC in the original wallet and live in Czech republic for the math to work :). Adjust for your BTC holdings and price of beer accordingly.

Let me know in the comments below how was your experience with claiming and dumping BTG.

Next up: Bitcoin Diamond (BCD)

Bitcoin Gold not posh enough for you? Say no more. I have exactly the thing: Bitcoin Diamond. But it will have to wait till the next episode.