Bitcoin Gold Is About to Trial an ASIC-Resistant Bitcoin Fork
After Bitcoin Cash (Bcash) forked from the Bitcoin blockchain to create a new cryptocurrency (BCH), and forward of this SegWit2X fork that may do the same thing, a third Bitcoin fork is in the making: Bitcoin Gold (Bgold; BTG). But in which Bcash and SegWit2X are scaling-related forks — both largely raise Bitcoin’s block size limitation — Bgold wants to re-decentralize mining by using a brand new proof-of-work algorithm.
“What was created as decentralized is currently centralized,” Bitcoin Gold contributor J. Alejandro Regojo informed Bitcoin Market Insider, speaking to the current condition of Bitcoin mining. “With this fork, we would like to show how Bitcoin can function as ‘Satoshi’ as possible, as social as you can, and as decentralized as possible.”
The open job has been gaining traction and support in the wider cryptocurrency area since, with a dedicated Slack as a main hub for dialogue and organization. Bgold is currently being developed by the pseudonymous programmer “h4x3rotab” and a small group of volunteers contributing to the project in different ways.
The attention Bgold has attracted is probably in part because anybody who possesses bitcoin (BTC) on October 25th will get the equivalent amount of BTG. While this model has been criticized, particularly because it poses a burden on service providers and consumers, it has also proven successful. With the launch of Bitcoin Cash in particular, users eagerly announced their batch of “free money,” while trades, wallets and other support suppliers proved comparatively inclined to integrate the new coin.
Further, the Bgold team believes that this supply method also needs to benefit Bitcoin over altcoins as it offers an excess incentive to maintain BTC on particular dates.
“But the key goal that we’re attempting to achieve with this fork is to construct a perpetually ASIC-resistant variant of Bitcoin,” said Robert Kuhne, another Bitcoin Gold contributor, in describing the use of the project to Bitcoin Market Insider.
Bgold contributors like Regojo and Kuhne think that Bitcoin’s proof-of-work hashing algorithm has been essentially divided from the introduction of specialized ASIC (application-specific integrated circuit) mining hardware. In the first years of Bitcoin’s presence, human users were frequently also miners; this has since become concentrated into relatively centralized data centres operated by specialists.
“And we are currently in a situation where 65 percent of hash electricity comes from a nation that does not enjoy Bitcoin,” Regojo mentioned, referring to China’s recent clamp down on cryptocurrencies.
An Uneven Playing Field
And while mining is concentrated, ASIC manufacturing is even more centralized, the Bgold contributors pointed out. Just a couple of companies now produce such technical chips.
It follows that anyone who would like to become a miner in any meaningful manner is beholden to these firms, Kuhne claimed.
“The way the monopoly manufacturer now works is abusive to its clients — human miners — and the business at large,” he said, speaking to important Chinese ASIC producer Bitmain. “Manufacturers can create ASICs in a very small price, but miners have to purchase at a high cost. This violates the one-CPU-one-vote ethos as clarified in the Bitcoin white paper, because while everybody is able to buy CPU at the exact same price, the same isn’t true for ASIC hardware.”
They suggest that the barrier of entry to the ASIC marketplace to compete with existing manufacturers is basically too high to allow for open competition.
“You can’t build a factory without approval from the government and banking system. So there are really not a lot of things on the planet that have complete authority over who can and can’t manufacture ASIC machines. And all this might possibly get considerably worse if and when those institution really start feeling the disruption from Bitcoin, that hasn’t begun in earnest yet,” Kuhne said.
As opposed to the Bitcoin Cash and (especially) the forthcoming SegWit2X forks, Bitcoin Gold very especially doesn’t create a promise to be the “actual” Bitcoin. Rather, the Bgold project expects it could prove a beneficial practice for Bitcoin; a sort of test case for a hard fork which Bitcoin itself might one day demand.
Concretely, Bitcoin Gold is currently implementing the Equihash proof-of-work algorithm. This is already employed by Zcash and is relatively ASIC-resistant.
Full ASIC-resistance, however, is regarded as hopeless: Any mining algorithm could be subject to technical chips. Much like Vertcoin, the Bgold community consequently plans to re-deploy a new proof-of-work algorithm hard fork if it is found out that ASIC-chips for Equihash are being created. (This strategy alone, obviously, can be a deterrent for any potential ASIC-producer.)
For safety, the project plans to employ strong replay protection to prevent loss of capital for unsuspecting or non-technical users. It will also adopt a new problem re-target algorithm to protect against the blockchain from stalling: Difficulty is re-adjusted at each block instead of once every 2 weeks.
Though the coin is set to start a couple of weeks from now, the Bgold codebase isn’t yet fully grown and ready to be deployed. Implementation of this new proof-of-work algorithm and replay protection, in addition to the new problem re-adjustment scheme, are yet to be completed.
Nor are all of the details for the project even ironed out.
Early announcements indicated that Bitcoin Gold would have a closed launching and also a presale of coins. A new batch of BTG was to be mined at the first week after the fork and subsequently distributed to designated investors, not unlike an ICO. Proceeds of the “ICO” were then to be utilized for development and other Bgold-related purposes.
However, because interest in the project grew, this thought became more contentious. Not everybody involved in Bitcoin Gold enjoys the concept of an extra creators benefit — something Bcash, by way of instance, didn’t have.
Kuhne addressed the problem by saying: “We’ve heard a great deal of opinions from the neighborhood, so this suggestion is going to be substituted with an upgraded and enhanced strategy. But we won’t fully eliminate the prospect of a small pre-mine to supply a basic amount of funding to your job.”