What is Bitcoin Gold?

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Contributor, Benzinga
November 1, 2021

Decided you want in on the action? You can buy Bitcoin Gold on Gate.io.

Bitcoin was created in 2008 and has since taken on many forms. It is important to understand these other Bitcoin-related tokens as they can be quite different from the original Bitcoin. 

Bitcoin Gold is one of these Bitcoin-related tokens and hopes to “make Bitcoin decentralized again.” Learn more about Bitcoin Gold with Benzinga’s guide.

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What is Bitcoin Gold?

Created in October 2017, Bitcoin Gold is a hard-fork of the original Bitcoin. A hard-fork essentially uses another blockchain as a starting point to create its own chain. The creators take the original chain and change certain parameters by splitting the chain into a seperate network. 

In the case of Bitcoin Gold, it utilized the framework of the Bitcoin chain to create its own chain that tries to combat some major issues with Bitcoin. Other examples of Bitcoin hard-forks are Bitcoin Diamond and Bitcoin Cash

Bitcoin Gold has experienced several security breaches since its inception. It was the recipient of a massive DDoS attack on the day of its launch. Bitcoin Gold miners accused its developers of adding extra mining fees during this attack, creating a distrust between the miners and developers. 

Bitcoin Gold developers also filed a lawsuit against Coinbase after its launch as Coinbase failed to airdrop tokens to Bitcoin holders. However, the ruling was in favor of Coinbase. This furthered the distrust and poor relationship between Bitcoin Gold developers and users. 

However, Bitcoin Gold has not seen a security breach in almost 2 years, and the developers relationship with the users is slowly improving. 

Bitcoin vs. Bitcoin Gold

The largest difference between Bitcoin Gold and Bitcoin is the consensus model. They both use a proof of work system, but Bitcoin uses a proof of work system that relies heavily on specialized equipment (often ASIC miners) to verify transactions. This allows certain groups to gain large control over the network and make it difficult for smaller miners to enter the sphere.

Bitcoin Gold looks to make mining more accessible for smaller operations. They place a higher emphasis on GPU mining, which is oftentimes more cost effective for those with less capital. This is achieved through a different mining algorithm that does not give ASIC miners an advantage over GPU miners. This allows the verification network to be more spread out and contribute to decentralization.  

In terms of an investment, Bitcoin has proven to be much better. Bitcoin hit all time highs in late October 2021. It has consistently beaten previous all-time highs for the past several years. Conversely, Bitcoin Gold has not come close to its all-time highs in 2017 of $539.72. It is currently trading between $60 and $70. 

Advantages of Bitcoin Gold

Bitcoin Gold is a liquid asset, and between 2 to 5% of its total market capitalization is traded hands every day. This means that your holdings can be cashed out at any time. This is particularly important in the crypto markets as assets are often much more volatile.

Bitcoin Gold can also be used as a way to diversify your portfolio. It uses a unique mining algorithm that may prove to be useful in the future. This algorithm sets it apart from other cryptocurrencies and can make your crypto portfolio more diverse. 

The cryptocurrency also offers high levels of decentralization. Because its verification system is spread out, it can contribute to decentralization. It is hard to control the network and can prevent attacks on the network.

Disadvantages of Bitcoin Gold

However, Bitcoin Gold falls short in several areas. Most notably, Bitcoin Gold’s adoption is lagging far behind the original Bitcoin. Bitcoin is used in a variety of places, ranging from institutional hedges of inflation to consumer spending and even in ETFs. 

Bitcoin Gold is struggling to gain adoption and it is mostly used as a form of payment. While Bitcoin Gold is accepted at a large list of retailers, it is nowhere near the level of adoption as Bitcoin. 

Many also see Bitcoin Gold as a copy of Bitcoin. They say that the only real difference between the chains is the mining algorithm. Because they are considered to be fairly similar, most adoption cases will be with Bitcoin, as it has a much higher volume and a market cap over 1,200 times the size of Bitcoin Gold’s. 

Bitcoin Gold is also more volatile than Bitcoin. It shot up to highs of nearly $540 in 2017, and seen lows of less than $10 in 2021. This can make it difficult to adopt as the price is constantly fluctuating. 

What Types of Investors Benefit From Bitcoin Gold?

There are several investors that may benefit from the use of Bitcoin Gold. New crypto investors may benefit from Bitcoin Gold investments, as it allows them to experience features of Bitcoin without directly investing in the currency. It also has a lower price, which may be more appealing to those with less capital.

Corporate investors may also benefit from the decentralization of Bitcoin Gold. They can process payments with more decentralization. This can be beneficial for deals corporate investors want to keep separate from institutions. 

Lastly, Bitcoin Gold can be a good investment for more advanced crypto traders looking to diversify their portfolios. As stated earlier, its unique verification model may prove to be useful in the future if large miners begin to gain too much control over the chain.

Benzinga’s Best Crypto Exchanges

Now that you understand the basics of Bitcoin Gold, you may be interested in purchasing the token. Fortunately, it is a fairly simple process to obtain the token.

Perhaps the quickest way to purchase Bitcoin Gold is through an exchange. Exchanges like Huobi Global and Gate.io allow users to exchange other currencies for BTG. Creating an account on either exchange is fairly simple and typically requires only an email and password. You may also have to enter in some personal information in adherence to know your customer (KYC) laws.

Is Bitcoin Gold a Good Investment?

Bitcoin Gold has unique properties that set it apart from other currencies. However, it has yet to see the levels of adoption that Bitcoin has achieved. If Bitcoin Gold can begin to increase its use cases, it may prove to be a solid investment. 

What is Bitcoin Gold used for?

Bitcoin Gold is mainly used as a form of payment and is a mineable cryptocurrency. Holders can use it to pay for retail goods, and also earn the token through mining. Most commonly, however, Bitcoin Gold is used as a speculative investment.

Is Bitcoin Gold backed by gold?

No. Bitcoin Gold is not backed by gold. However, other tokens, such as AABB Gold Token, are backed by gold. 

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About Caden Pok

Caden has been involved with cryptocurrency for several years, began trading and investing in crypto in 2018 and is highly experienced with DeFi technology. He took part in undergraduate research studying cryptoeconomics and is a member of Wolverine Blockchain, a group designed to educate students on cryptocurrencies and blockchain technology. Currently, he mines multiple coins and holds positions in Cardano and Ethereum.