The key change is that Bitcoin Gold is mined fastest by GPUs — they’ve changed the hash to Equihash, a memory-bound hashing algorithm taken from Zcash. The idea is to make GPU mining feasible once more: “When we find asic is created, we will change to another PoW.” To avoid the problems Bitcoin Cash has had with long delays between blocks, Bitcoin Gold plans to adjust the mining difficulty each block.
The effort is being led by Jack Liao of LightningASIC, which makes GPU mining rigs. LightningASIC advocates this fork as necessary competition for Bitmain, the biggest manufacturer of ASIC-based Bitcoin mining rigs (who are also one of the backers of Bitcoin Cash) — though they claim that “Bitcoin Gold is not a competitor of Bitcoin.”
There’s also all those Ethereum rigs that overenthusiastic home miners bought in June and July that are currently grossing a few dollars a day (before electricity) from NiceHash, and which will suddenly be obsolete if Ethereum succeeds in moving to Proof of Stake — that’s a miner base just waiting for a chance.
Bitcoin Gold was announced on 26 July 2017 and the plan is to fork as of 25 October, with the full network launch being 1 November.
Why do a Bitcoin fork instead of an altcoin? The hook is, of course, the promise of free money for existing Bitcoin holders. (A “dividend fork.”) As I note in chapter 9 of the book, altcoins “have a much simpler value proposition: you might get rich too if you start your own magical Internet money!”
SegWit2x and the backlash
There’s no reason there can’t be endless Bitcoin “dividend forks,” just as there are endless altcoins and ICOs. SegWit2x still plans, per the New York Agreement, to fork in November. It will likely become a fourth full-history Bitcoin fork — but there’s a non-negligible possibility that it could take over as the main Bitcoin, given it has substantial miner support, even if the rest of the Bitcoin ecosystem doesn’t seem to be all that thrilled.
Bitcoin core developers and supporters have objected strenuously — supporters making claims such as:
- “If 2X proponents try to take the BTC ticker, they will get sued to oblivion” — I would love to see the legal theory behind that one.
- the Bitcoin price will go over $5000 if everyone just ignores 2x — for vague handwaving reasons that assume Bitcoin works like a normal commodity market and the price isn’t ridiculously and obviously manipulated.
- SegWit2x would constitute a “terroristic attack on a financial network,” and maybe someone could report SegWit2x lead developer Jeff Garzik to “the Japanese police and Interpol.”
The developers have left such hyperbole to the fans, but are not at all pleased with the 2x proposal:
- Greg Maxwell has said that if SegWit2x takes over, the current Bitcoin core development team may quit. (2x has far fewer developers involved.)
- They have mooted changing the open source licence for future changes to the Bitcoin software (presently under the ultra-permissive MIT License) such that derivatives could not use the names “Bitcoin” or “BTC” unless they had protocol compatibility with the Bitcoin code. This is entirely legal, but does appear a somewhat disconcerting assertion of trademark-like rights on a term that wasn’t trademarked by its creator, nor any time in the eight years since. (Greg disagrees with me on this characterisation.)
- The bitcoin.org site will be running a denunciation (archive) of companies supporting SegWit2x, placing “a banner on every page of the site warning users about the risks of using services that will default to the so-called Segwit2x.”
Bitfinex are dealing with the potential split by offering Chain Split Tokens that will allow traders to bet on the “potential activation and mining of the Segwit2x protocol.”
I predicted before that Bitcoin would likely end up going whichever way the miners go. The other complicating factor right now, though, is that we don’t know what’s going to happen with the Chinese miners, who are much of the support for 2x — whether the local authorities will allow them to continue mining bitcoins and selling them for dollars (perhaps they can advocate this to the government as export income), or will just shut them down like they did the exchanges.
As Hunting4Downvotes on Reddit /r/buttcoin explains:
Satoshi’s plan for 21 million coins was the perfect amount. Because when there’s only 42 million coins, the value of your coin continues to increase with time. And when the entire world is forced to use bitcoin, the scarcity of only 63 million coins ensures wealth and prestige for early adopters. And because there are only 84 million coins, it is the perfect libertarian money.
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