The cryptocurrency evolution started over a decade ago with the launch of Bitcoin. While it was not perfect, the Bitcoin blockchain overcame various challenges that had prevented the creation and adoption of virtual currencies. Since then, the sector has grown to new heights with constant attempts being made to improve upon the existing blockchain infrastructure.
Bitgesell (BGL) is the latest attempt to create a cryptocurrency that is the evolutionary successor of Bitcoin. It is named in honor of Silvio Gesell, a German entrepreneur and a theoretical economist who believed that most of the global economic problems could be solved if money is just an instrument of exchange and not a store of wealth. According to Gesell, if money came with an expiration date, losing value with time, people would be encouraged to spend or even loan it out to others at no extra cost, which would help in adding value to the economy. The Bitgesell project draws inspiration from his philosophy to create an incremental improvement to the Bitcoin ecosystem.
What is Bitgesell?
Bitgesell is a crypto ecosystem that improves upon Bitcoin’s digital gold model by addressing some of its shortcomings. The platform implements a futuristic model of Bitcoin in the present day, which cuts short the time otherwise required by any cryptocurrency to attain that model as part of their evolution.
How does Bitgesell Differ from Bitcoin?
A lot of people and organizations have in the past couple of years raised concerns regarding the ever-increasing need for the processing power to maintain the Bitcoin network. By design, the algorithm behind Bitcoin adjusts mining difficulty levels based on the collective hashrate on the network, which continues to increase over time. This has made mining an energy-intensive operation, allegedly consuming energy which could otherwise power a small nation. Bitgesell reduces the amount of processing power required to secure a network by making some fundamental changes to the hashing algorithm, along with a reduction in the block weight and halving interval among many.
The Bitgesell protocol makes use of an advanced SHA-3 based Keccak hashing algorithm, which is much more capable than the current SHA-2 standards used by Bitcoin. The increased cryptographic security as well as superior hardware-based cryptographic routines supported by SHA-3 optimizes the Bitgesell blockchain for energy-efficient mining.
Drawing inspiration from Bitcoin’s successful model, Bitgesell limits the total emission of BGL tokens to a fixed 21,000,000, with a block size of 0.4 MB, which is 10 times small than the current Bitcoin block weight. Even the halving interval is set to 1 year instead of Bitcoin’s 4 years. This will allow Bitgesell to progressively throttle the supply as well as achieve complete emission in less time compared to Bitcoin.
The Bitgesell protocol intends to maintain uniformity and efficiency of transactions happening over the network by 100% segwit implementation right from the beginning. The use of segwit combined with reduced block weight and block discovery times creates a balance between the cost of transactions on the network as well as incentives for the mining community. Meanwhile, the network burns 90% of the transaction fees which in turn will affect the supply of BGL and drive the token’s value upwards. In this scenario, the block rewards for miners is calculated based on the formula: Block Reward = nFees*0.1 + GetBlockSubsidy(), where nFees is transaction fees and GetBlockSubsidy() is a function that calculates block rewards after factoring in the halving based on the current block height.
What Bitgesell Aims to Achieve?
By design, Bitgesell aims to be a lighter, faster and future proof version of Bitcoin that supports faster transaction speeds through network-wide usage of the lightning network. It also factors in the sustainability of network by implementing a new hashing algorithm, reduced block weight, 1-year halving intervals and a 90% burn rate for transaction fees. These changes will reduce the processing power required for mining BGL, increase the frequency of block discovery and in turn the mining rewards while simultaneously driving the value of the tokens which will make it more rewarding for the miners even after the conclusion of new BGL token emissions. The reduced block weight also increases the fee competition for transactions to be included in the block, which adds to the profitability of contributors to the network.
The creators of Bitgesell view BGL as a cryptocurrency designed for buying and holding – an essential investment digital coin. They also believe that the higher transaction costs associated with transactions of BGL will deter people from using it criminal activities or unfair manipulation of the market and rather use it for capital investment.
Journey So Far
A relatively new project, Bitgesell has moved rapidly to create the necessary basic infrastructure. It has already launched few critical applications like BGL wallets, Block explorer and mining pools. The BGL token is already listed on HotBit exchange. Bitgesell is completely open-source and the codes are available on GitHub.
The project is currently involved in community building activities as further development of the ecosystem continues in parallel. Bitgesell looks interesting on paper and maybe in the next few months, we will see new features and application launches that could make a meaningful impact on the crypto sector.