Bitcoin hard fork results in new coin Bitcoin Gold

(October 28) Bitcoin has just recently experienced a hard fork that created a new cryptocurrency Bitcoin Gold. One important idea behind the new coin is to enable people to mine the coin without using expensive mining equipment.

What is a bitcoin miner?

Bitcoin mining is the process by which bitcoin transactions are verified and added to the public ledger or block chain. But it is also the means by which new bitcoins are created. The mining involves compiling transactions in blocks but also solving computationally difficult puzzles. The miner who first solves the puzzle gets to place the next block on the blockchain. The miner receives a reward of transaction fees plus newly released bitcoins. The appended You Tube video shows one of the huge mines that now mine bitcoins. Small scale mining using personal computers is no long profitable as the costs of power will generally be greater than the value of the rewards.

What is a blockchain?

Wikipedia describes the blockchain as follows: "A blockchain – originally block chain – is a continuously growing list of records, called blocks, which are linked and secured using cryptography.] Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data. A blockchain can serve as "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way." The appended You Tube video explains the purpose of the blockchain and how it works.

Just recently, bitcoin experienced what is called a hard fork in which changes are made to the rules governing the blockchain that everyone must accept if they are to continue carrying out transactions on the blockchain. If some do not accept the rule changes a new coin can be created as in the case of an earlier hard fork in bitcoin that created bit cash.

The recent fork has created Bitcoin Gold. Soft and hard forks are explained in the appended You Tube video.

Bitcoin mining now requires investment in rigs that are quite expensive costing $3,000 to $4,000 each and even they are outdated as technology advances and the difficulty of mining increases. Hardware and power consumption become costly and increases the cost of transactions.

Bitcoin Gold (BTG)

The powerful mining systems known as application-specific integrated circuits (ASICs) will be unable to mine Bitcoin Gold. Bitcoin Gold uses a different algorithm for mining operations than bitcoin so that the big rigs will not be able to mine the coin whereas those with regular graphical processing units will be able to do so. At bitcoin block 491,407 Bitcoin Gold (BTG) was born. However, Bitcoin Gold needs acceptance.

There are two opposing camps. One camp supports Bitcoin Gold while the other considers it an elaborate scam that is using bitcoin as an advertising method.

Just two days before the hard fork the exchange Coinbase said that they would not support Bitcoin Gold because the developers would not make their source code available to the public. Bitcoin Gold responded by saying that the Coinbase statement was inaccurate and that they were lying. But Coinbase was concerned that the code was not released for the pre-mining operations that were taking place over the week. The Bitcoin Gold development team had pre-mining operations that allowed the development team to mine 100,000 coins prior to being available to the public.

Poloneix is another exchange to take the same stance as Coinbase. Both emphasize that they will not be hindering customers from receiving the Bitcoin Gold coins they will receive from the split or keeping them. Twenty exchanges have already said they will list the new currency on their exchanges.

In the case of the earlier hard fork that produced bitcoin cash last August, the price of the currency rose at one point to over a thousand dollars but has since dropped to under $350-actually, it is over $400 again now.

After the recent fork, the price of bitcoin fell 4.42 percent It may take about a week before Bitcoin Gold is available to spend. Surprisingly, ninety other cryptocurrencies have risen since the fork. The launch of the fork was marred by a distributed denial-of-service attack on the Bitcoin Gold website although it has since come back on line.

Analysts and others are split on whether a hard fork is a good idea. Some feel that bitcoin can be improved upon and a split provides new coins that can be traded. Others feel that splits could dilute the market and that it reflects dissension within the community. While Bitcoin Gold lost a great deal of its value in the first hours after the break it remains to be seen whether it will recover.

A recent bitcoin price was about 5,710 as it dropped almost 7 percent within the last week. Bitcoin Gold fared much worse with a price of just around $116 a more than 70 percent drop in its value although it was heading back up during the last hour or so of trading. In contrast, bitcoin cash the coin from the earlier fork has risen to $415 in the last week. These prices are quite volatile and can change significantly within a few hours.