Analysts have expected the price of Bitcoin Gold to surpass that of Bitcoin Cash upon its debut. However, over the past few hours, almost immediately after its launch, the price of Bitcoin Gold has dropped by nearly 51 percent.
Difference Between Market’s Support For Bitcoin Cash and Bitcoin Gold
Bitcoin, Bitcoin Cash, and Bitcoin Gold are fundamentally different, conceptually and structurally. Bitcoin Cash was created in August by Chinese mining pool operator ViaBTC to create a more “scalable’ blockchain network. On the contrary, Bitcoin Gold was launched with a minor change to bitcoin’s proof-of-work (PoW) consensus protocol.
As bitcoin developer Jimmy Song explained:
“Changing proof-of-work is generally going to require a hard fork and BTG has decided to go that route. The proof-of-work that they’ve chosen is Equihash, a memory-hard algorithm that’s fairly ASIC resistant and also used by ZCash. The idea is to give mining back to the users who can start using CPUs and GPUs to mine. BTG developers are also considering a premine of up to 1%.”
To be critical of Bitcoin Gold, its minor change in the bitcoin consensus protocol is unoriginal, impractical, and most importantly, unnecessary. Alternative cryptocurrencies (altcoins) have pursued similar strategies in the past to decentralize the mining ecosystem. But, as the mining industry evolves, inevitably, miners and mining pool operators will begin to seek for more sophisticated technologies, equipment, and hardware to produce cryptocurrencies.
The launch of Bitcoin Cash could be justified if the demand for the cryptocurrency from a small portion of businesses and developers that want a fork of bitcoin blockchain that is larger in capacity and more flexible is sustained in the long-term. With Bitcoin Gold, it is more difficult to justify its use cases and necessity because at this point, “mining centralization” is a nonissue and has not been a major problem for the bitcoin industry over the past few years.
Community’s Demand For Bitcoin Gold Demonstrated in its Price Trend
The aforementioned critique of Bitcoin Gold has evidently been proven by the market, as the price of Bitcoin Gold plunged by 51 percent during the first day of its launch. It was launched on the Bitfinex trading platform, the largest cryptocurrency trading platform in the world. Hence, Bitcoin Gold has had sufficient liquidity and a large consumer base to test the market.
So far, the community has not been satisfied and in support of the Bitcoin Gold hard fork, primarily because of its lack of strong replay protection. Earlier this week, Trezor, the company behind secure hardware bitcoin wallet TREZOR Wallet, stated that allowing users to withdraw Bitcoin Gold at this stage of development would endanger existing bitcoins.
As Trezor explained:
Bitcoin Gold’s codebase is, at the moment of the writing, incomplete. Most importantly, it lacks replay protection. For this reason, TREZOR Wallet will not support Bitcoin Gold yet, as it would endanger your bitcoins. Replay protection prevents a transaction on the Bitcoin Gold chain from being re-transmitted on the Bitcoin chain and vice versa.