Fool’s Gold – on the upcoming Bitcoin Gold (BTG) fork

Posted on Categories Crypto News

Pyrite’s metallic sheen and pale brass-yellow hue gives it a superficial resemblance to gold, leading to the well-known nickname of “fool’s gold.”

Forks happen. I think it’s a good thing. I don’t support Bitcoin Cash (and don’t even get me started on Segwit2x), but I believe that anyone has the right to adapt open-source software to tailor it to their vision of what it should be. With Bitcoin, this ensures that the system remains fair.

In theory, it’s great that we have that safeguard, should Core fail to perform in a way that users deem acceptable. In practice, it’s an excuse for frauds, egomaniacs, and downright lunatics to attempt to enrich themselves by leveraging the weight the Bitcoin name carries.

If there were awards for “worst Bitcoin clone”, Bitcoin Gold would win every single one, by a landslide. Scheduled to fork on the 25th of October, BTG hopes to become a more decentralized alternative to Bitcoin. The most notable change is a switch from ASIC mining to GPU (moving from SHA-256 to Equihash), as well as a promise of “fair distrubution” − that’s not a typo, check out the website.

The fork requires no action on the user’s behalf. If you are in possession of your private keys, you will receive an amount of BTG equivalent to your current holdings. Contrary to the claims made by the site, however, there is no replay protection implemented as of yet. If, like myself, you’d planned on dumping it the second it hit your wallet, I’d reconsider: this effectively puts your real coins at risk.

I do agree with the team on one point − I think Bitcoin could be more decentralized. I’m skeptical of the ASIC mining cartels that have formed. But Satoshi’s idea of “one CPU, one vote”, whilst noble, simply isn’t feasible, and switching to GPU mining isn’t going to change that.  Instead of competing with Bitcoin for hashpower, Bitcoin Gold will have to go up against the hordes of altcoins using the same algorithm.

Digging into the project throws up some red flags. It seems that they’ve attempted a few ICOs, but failed. The code is poorly written. The launch date has been changed several times. The team lied about replay protection. A lot of evidence points to the fork having secretly happened already. Oh, and for all their hard work, they’re rewarding themselves with a premine of 200,000 coins.

It’s a fairly generous sum, considering the code’s basically been copy-pasted. One programmer actually created a client for Bitcoin Gold that removes the premine (if the majority of users adopt this, the fork will remain the same, minus the blocks mined in advance). If you don’t feel like indulging these clowns in their cash-grab, but still want to mine BTG, you can find that here.

Bittrex have already made their stance clear on where they stand regarding the listing of the coins. Kraken initially issued a statement to the same effect, but later retracted it and remains undecided as of yet, and Trezor has warned of the risks associated with the incomplete code. Bitfinex, on the other hand, has implemented a Chain Split Token.

Amazingly, YoBit has been trading BTG futures for as high as 0.2 BTC with a fairly balanced order book.

What this high level of interest means is unclear − is the Bitcoin Gold team generating artificial interest? It’s probably worth noting that this could be genuine market movement, but bear in mind that YoBit doesn’t have the reputation that other exchanges do, and that you shouldn’t necessarily trust this information. More recently, Binance has also begun to trade.

The consensus amongst seasoned Bitcoin veterans seems to be that this is just another cheap imitation, being propped up by the developers to profit from their obscene premine. The project will likely be DOA. Some worry that these poorly-executed forks dilute the Bitcoin image, but I’d argue that they strengthen it. This is not the last fork by a long shot, and as more and more clones crop up, people will grow bored and stop giving them attention. It does very little to the Bitcoin brand in the long run, but creates negative stigma around forks altogether.

The real problem here is the appalling quality of the code − you only need to look at the Trello to see the myriad of unsolved issues that haven’t even been tested yet. Until replay protection has been proven implemented, I wouldn’t dignify the fork with the time of day.

Featured image from Pixabay

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