What is Bitcoin Gold? Why the Latest Fork of the Blockchain Matters

Bitcoin Gold is live. At 2 p.m. Eastern on Sunday, the latest splinter from the world’s biggest cryptocurrency hit the internet. It’s the second time this year that a project has “forked” — split away — from Bitcoin’s blockchain, the first being Bitcoin Cash back in August. Its developers have big plans to make a cryptocurrency that’s decentralized and free from major group influences.

One of the biggest differences between Bitcoin Gold and its predecessor is the mining algorithm each uses. Over time, Bitcoin went from being a cryptocurrency that regular computers could mine to one that required specialized, bespoke hardware. The new Bitcoin Gold uses the Equihash algorithm instead of SHA256, which means that application-specific integrated circuit boards (ASICs) designed for mining Bitcoin at rapid speed won’t work with the new cryptocurrency.

“The only way to participate in Bitcoin mining is to buy hardware from one of those manufacturers - the biggest of which is believed to manufacture over 70 percent of the global supply of SHA256 ASICs,” the Bitcoin Gold team said in its roadmap documents. “This has led to a situation where one entity can hold the entire network hostage, and this is exactly what happened when the backwards compatible Segregated Witness upgrade was blocked by a faction of miners, despite there being universal consensus from Bitcoin experts that it should be activated.”

Although the currency launched on Sunday, Bitcoin Gold split from the blockchain on October 25. That means the new currency split from block 491407, earlier than launch. As of 10 a.m. Eastern time this Monday, one bitcoin gold was valued at $264.53 by Coinmarketcap. By comparison, one bitcoin was valued at $6,576.83.

However, while the project’s official website lists 18 exchanges, five wallets, and 16 pools that support the new cryptocurrency, there are some notable exceptions. One of those is Coinbase, which has exchanged over $40 billion worth of digital currency for over 12 million users. In a support document dated October 23, the exchange said:

We operate by the principle that our customers should benefit to the greatest extent possible from hard forks or other unexpected events. However, safety and security are also important considerations for any asset supported by Coinbase.

At this time, Coinbase cannot support Bitcoin Gold because its developers have not made the code available to the public for review. This is a major security risk.

Alongside the cryptocurrency’s launch, the Bitcoin Gold project released its code to the public via GitHub. Inverse has contacted Coinbase to see if its position will now change.

Until then, buyers interested in the new currency will have to use an alternative exchange like BitBay or CEX.IO, which Bitcoin Gold lists as both offering support.