Bitcoin Gold, the bitcoin fork that was supposedly created to move bitcoin away from mining centralization and ASICs has just announced that they will be changing their mining algorithm to resist new Equihash ASIC miners. The new algorithm, called Equihash-BTG, is in some ways similar to the original algorithm that is still used by Zcash, but is designed to be extremely memory hard.
The Bitcoin Gold Dilemma
Bitcoin Gold has always had something of a rocky life. It was launched shortly after the incredibly popular Bitcoin Cash, which led many to suspect that it was merely a cash grab attempt. To make things worse, the currency also faced a major controversy in the form of an alleged pre-mine that was designed to pay the creators of the currency a princely sum. They later called this the “premine endowment“.
In recent months, the Bitcoin Gold network has been a victim of a 51% attack that was not only successful, but apparently very profitable for the perpetrator. The perpetrator was able to weaponize NiceHash and overwhelm the network.
More recently, coin prices for Bitcoin Gold have dropped dramatically by close to 85%. At press time, Bitcoin Gold is trading for only around $40 each, from a previous steady price of around $200-$300 each.
For more information about Bitcoin Gold and its origins, check out our article on the subject here.
Staying One Step Ahead
The new algorithm being introduced to the currency is designed to accomplish two things. First, it’s goal is to enable more ASIC resistance within the network.
In a blog post titled “A Response to the ASIC Threat” that was published on May 4 of this year, the group stated their intentions to shift away from their current algorithm before the Bitmain-created Equihash miners would be released to the public. The teams cited the recent decision by Monero to hard fork away from Bitmain ASIC devices, and claimed that the success of Monero’s hard fork was a major inspiration for them.
According to the official blog post, the original algorithm was designed to be difficult enough so as to prevent ASIC mining from being profitable “for quite some time”. Basically speaking, the idea was to make an algorithm that would require an extremely expensive ASIC in order to mine. Such a device would be so expensive that it would be effectively impossible to profit from.
However, now that the Equihash miners are on the way, the team has responded with their updated version of the algorithm that will need, in their words, “dramatically more memory to run – so much more that we believe [Equihash-BTG] ASICs will be impossibly unprofitable for quite some time”.
Fighting 51% Attacks
How to Mine with Nicehash
If a proof-of-work cryptocurrency has an algorithm that can be powered by ASICs, and the hash rate on the network is not sufficiently high by itself, then a 51% attack, if profitable, becomes inevitable. Switching over to this new ASIC resistant algorithm could prevent or at least make such attacks much less cost-effective or profitable.
In this regard, Bitcoin Gold could still be facing threats of 51% attacks as their mining algorithm is still designed to be mined by standard GPU hardware, of which sufficient hash rates could still be rented for an attack.
Other coins which have been attacked recently are taking different strategies to protect themselves. GameCredits, for example, is making use of Komodo in order to periodically stamp or notarize the blockchain so that in the event of an attack, things can be rolled back to the correct and verified chain.
A Long Way to Go
Bitcoin Gold is in an interesting position because although it has somewhat of a negative history and an increasing amount of bad press, it is still positioned quite highly in the minds of many traders and investors.
For example, it is one of only a few assets that is currently listed for tracking on the infinitely popular Robinhood stock trading app, which plans to launch crypto trading sometime in the near future.
If Bitcoin Gold can turn things around, they could find that their asset becomes popular once more. However, they will need to differentiate themselves from other popular ASIC resistant proof-of-work projects like Vertcoin, which is currently trading for a much lower price per unit and has generally held a better reputation.