Bitcoin Gold (BTG)

Bitcoin Gold (BTG) is a cryptocurrency created by a hard fork of Bitcoin at block 491,407 on 24 October 2017. Its developers replaced Bitcoin's mining algorithm with one designed for ordinary graphics cards (GPUs) instead of the specialist ASIC machines that dominate Bitcoin mining, with the stated aim of putting mining back in the hands of individuals. Anyone holding Bitcoin at the fork received one BTG for each BTC.

This entry covers the coin. BTG shares the history of Bitcoin (BTC) up to the fork and copies its supply rules, but it runs on its own chain with its own miners. It came less than three months after Bitcoin Cash (BCH), which split from Bitcoin over block size rather than mining, and it has nothing to do with tokens backed by physical gold. Today it is best known as a case study in how a small proof-of-work coin can be attacked.

Think of a gold rush that has grown so competitive that only companies with giant custom-built excavators still find anything. Bitcoin Gold's founders copied the claim and changed the rules so that the new ground could only be dug with ordinary tools, the kind many people already own, hoping to bring back the small prospector.

The catch is that ordinary tools are easy to rent. Someone who borrows enough of them for a few hours can briefly out-dig everyone else on a small site and rewrite who owns what. That is what happened to Bitcoin Gold twice: its ground was small enough that an outsider with rented equipment could take control for long enough to spend the same coins twice.

The fork took a snapshot of Bitcoin balances in October 2017, but the network did not open to the public until November 2017, after the team added replay protection so that a transaction on one chain could not be copied onto the other. Before launch the developers mined about 100,000 BTG for themselves as an "endowment" to fund development, a premine that drew criticism.

In May 2018 an attacker gained majority control of BTG mining and carried out a series of double spends against exchanges, taking more than 388,000 BTG, worth about $18 million at the time. Bittrex, one of the exchanges hit, asked the BTG team to cover 12,372 BTG of its losses; the team declined, and Bittrex delisted the coin in September 2018. The South Korean exchange Upbit also announced a delisting. In July 2018 BTG switched to a more memory-hungry version of Equihash, the mining algorithm also used by Zcash, to make attacks harder, but on 23 and 24 January 2020 two further chain reorganisations allowed about 7,167 BTG, roughly $72,000, to be double-spent.

BTG keeps Bitcoin's design: a cap of just under 21 million coins, halving block rewards, and proof of work, in which nodes follow the chain with the most accumulated work. That rule is what an attacker exploits. The Bitcoin white paper gives a simplified chance that an attacker who is $z$ blocks behind will ever catch up with the honest chain:

• $q_z$ is the probability that the attacker eventually catches up.
• $q$ is the attacker's share of total mining power, and $p = 1 - q$ is the honest share.
• $z$ is the number of blocks the attacker must make up, roughly the number of confirmations a recipient waited for.

An attacker with 30 percent of the mining power facing six confirmations has a chance of $(0.3 \div 0.7)^{6} \approx 0.006$, about 0.6 percent. But the formula only applies while $q \lt p$; once the attacker controls half or more, $q \ge p$ and catching up becomes certain, however many transaction confirmations the victim waits for. On a small network, renting that much power for a few hours can cost far less than the coins it lets the attacker steal, which is why BTG suffered a 51% attack more than once.

BTG trades on a small number of exchanges, and its market capitalization is a tiny fraction of Bitcoin's. Critics point to the premine, the delistings that followed the attacks, and the flaw in its founding idea: GPU mining power can be hired on open marketplaces, so making a coin GPU-friendly did not make it safer, and arguably made it easier to rent enough power to take over. Exchanges that still list it typically wait for a large number of blocks before crediting deposits to guard against the double-spend problem. BTG is sometimes grouped with Bitcoin SV (BSV) as a Bitcoin fork whose small share of mining power has left it exposed. As with other small coins, its liquidity is thin and its price can move sharply.

• Bitcoin Gold
• Bitcoin Gold source code (GitHub)