Bitcoin Gold was a hard fork of the original open-source cryptocurrency which took place on Oct. 24, 2017. While hard forks take place for a number of reasons—including to scale as a cryptocurrency customer base grows, or because of developer conflict and differences of goals—Bitcoin Gold’s stated purpose has been to “make bitcoin decentralized again.” Bitcoin Gold was one of the largest and most discussed bitcoin forks.
On the surface, the idea of “making bitcoin decentralized again” may seem counterintuitive. Like all other cryptocurrencies, Bitcoin is designed to be decentralized already; it is not linked with any central bank, a particular country, or government body.
One of the major issues with bitcoin which prompted the development of Bitcoin Gold, however, was not related to the question of central issuance at all. Rather, it had to do with the mining process. Bitcoin Gold developers believed that by adopting a new algorithm for the mining process (in this case, a so-called proof-of-work algorithm called Equihash-BTG), the new branch of the world’s most popular cryptocurrency by market cap would not disproportionally favor major mining operations.
Understanding Bitcoin Gold
Bitcoin mining is a lucrative but resource-intensive process. The most profitable mining ventures are often those that pool together many mining rigs, each of which requires expensive, special equipment. Individuals attempting to mine for bitcoin on their own either have to invest a huge amount of money and time into creating their own rigs or get passed by in the process, as their computers cannot compete with the professional rig systems.
One of the primary goals of Bitcoin Gold has been to change the algorithm by which the cryptocurrency itself is mined, meaning that the mining process cannot be run faster on specialized equipment than it can on standard computer systems.
Bitcoin Gold was not the first major hard fork of bitcoin. Bitcoin Cash forked off from the primary cryptocurrency on Aug. 1, 2017. On Nov. 15, 2018, a Bitcoin Cash hard fork split it into two currencies: Bitcoin Cash and Bitcoin SV.