Bitcoin hard fork is coming, and it is suspected to be a disguised way to raise money

There have been quite a lot of forks recently. We just experienced the Ethereum Byzantine fork on October 16. Now, Bitcoin, the "big brother" of virtual currency, is about to have another hard fork. This hard fork will lead to the birth of another new virtual currency, Bitcoin gold (BTG).

This Bitcoin hard fork will occur at block 491407, and is expected to occur on October 25, 2017 Beijing time.

First, let's take a look at what BTG is. According to the Bitcoin gold website (http://btcgpu.org/), at a pre-set block height, BTG miners will begin to create blocks using a new proof-of-work (PoW) algorithm, which will lead to a fork in the Bitcoin blockchain. As a result of this process, a new virtual currency will be born, and this new virtual currency is BTG.

What is the purpose of this fork? According to the statement on the BTG website, the initiator of this fork believes that Satoshi Nakamoto's ideal vision of "one CPU one vote" has been replaced by the current situation where mining equipment is controlled by a few people. Some Bitcoin producers who control a large number of mining equipment use their scale advantages to squeeze out individual miners and try to monopolize the entire Bitcoin primary market.

By changing Bitcoin’s Proof of Work (PoW) algorithm from SHA256 to Equihash (a graphics card algorithm), this new algorithm will provide an opportunity for countless new people around the world to participate in the mining process. A more decentralized and democratic mining infrastructure will make the entire market more dynamic and more in line with Satoshi Nakamoto’s original vision.

It seems that the entire design vision of BTG is very beautiful. Once realized, it will promote a more benign development of the Bitcoin market. However, there are now voices of opposition to BTG in the market.

Some senior Bitcoin investors pointed out that the fork was actually a big scam, saying that by changing the proof-of-work algorithm, mining hardware would become more popular and decentralization would be further achieved. The graphics card mining machines and Bitcoin mining machines used by BTG mining are also sold in the market, and no obvious advantages have been found in terms of price to lower the threshold for mining.

At the same time, according to a warning to investors from Bittrex, an American Bitcoin trading website, the developers of the BTG project will pre-mine 100,000 BTG. Once the market opens, the project developers may put 100,000 BTG on the market, posing risks to investors.

Bittrex’s warning to investors

Because of the existence of these pre-mined BTC, some people question whether BTG is actually an ICO project and has become a tool for project developers to make money. After all, once the market opens, these 100,000 pre-mined BTGs can be cashed out immediately.

In addition, Bittrex's warning also mentioned that BTG lacks a fully formed consensus code, has not yet implemented replay protection, lacks sufficient testing and auditing of the code, and the developers have not yet made the code public. Regarding the last point, Coinbase has publicly stated that since the developers have not yet made the code public, this constitutes the main risk of the project.

Another interesting thing is that the initiator of the BTG project, Jack Liao, is a Chinese. After verification, Jack Liao is Liao Xiang, the CEO of Lightning Intelligence. Liao Xiang officially entered the Bitcoin field in September 2013. Before that, he had been engaged in the electronics manufacturing industry in Shenzhen. After entering the Bitcoin industry, Liao Xiang's company began to manufacture Bitcoin mining machines using his background in the electronics manufacturing industry. In 2015, Lightning Intelligence, of which he served as CEO, launched a Bitcoin ATM. This time, Liao Xiang returned to the public eye as the founder of the BTG project.

Regardless of the outside world's controversy, the hard fork is coming on October 25. Let us wait and see what impact it will have on the entire Bitcoin market.