Back in November 2017, Bitcoin underwent a hard fork which resulted in Bitcoin Gold’s (BTG) creation. Since Bitcoin Gold is a fork of Bitcoin, everyone who held Bitcoin before the fork received an equivalent amount of BTG to BTC.
Therefore, naturally the coins market cap is large and is sitting near the top being ranked at number 25 with a market cap of $206 billion. To the uninformed, it would appear that Bitcoin Gold is a major cryptocurrency and worth investing in. However, this couldn’t be farther from the truth.
A recent study published by Crypto.IQ exposes the various flaws of countless ‘shitcoins’ plaguing the cryptocurrency market. Their study on Bitcoin Gold revealed some serious flaws undermining the value of the project.
Bitcoin Gold Vulnerable to 51% Attacks
The key difference between Bitcoin Gold and Bitcoin is that BTG was designed to resist ASIC miners in and make mining more available and distributed to GPU miners. While this worked for a while, the mining hash rate for BTG has become so low it’s very susceptible to a 51% attack. In fact, this already happened once in May 2018.
Before the attack, new ASICs made it possible to mine Equihash, BTGs once resistent proof-of-work (PoW) protocol. Not long after, the Bitcoin Gold network had $18.6 million worth of BTG stolen in a 51% attack.
To prevent another attack like this from happening, the BTG developers hard forked BTG to implement an updated of Equihash that’s supposed to be more ASIC resistant. What the developers failed to realize is that manufacturers can produce ASICs for any PoW algorithm. Therefore, BTG is still highly vulnerable to a 51% attack.
Bitcoin Gold is Centralized
The study also revealed that Bitcoin Gold has major centralization issues. From the beginning of Bitcoin Gold’s creation in November 2017 the developers pre-mined 8000 blocks, yielding them around 100,000 BTG.
At today’s price of $12 this equates to $1.2 million and when BTG was at its peak of nearly $500 in December, the developers had $50 million. According to the BTG team, they would release the pre-mined BTG slowly throughout time, not all at once.
However, according to Crypto.IQ, there is no way to verify if this is true and there’s speculation rampant among the community that the developers contributed to the excessive 97% price decline by dumping BTG.
Is Bitcoin Gold a Shitcoin?
Bitcoin Gold is not cryptographically secure as their grand plan of becoming more decentralized with the use of ASIC resistant PoW mining has failed and become their most fatal flaw. BTG’s mining hash power is very low which hurts with a 51% attack possibility. Finally, the coin is heavily centralized with developers in control of a large supply and failing to address the BTG ASIC mining issue.
Taking all the points covered in Crypto.IQ’s study on the viability of Bitcoin Gold it appears it is a shitcoin. The takeaway? Crypto users should educate themselves thoroughly before investing in any cryptocurrency. Just because a coin ranks highly on CoinMarketCap, does not mean it’s worth buying.
Do you hold any Bitcoin Gold? Do you agree with the points mentioned in this article referring to BTG as a shitcoin? Let us know in the comment section below.