The new hard fork that occurred in bitcoin this week has resulted in the arrival of bitcoin gold. Yet, analysts are still unsure whether this split in the digital currency is a good thing or not.
Indeed, following the hard fork the price of bitcoin gold quickly dropped by 66%. The price of the main bitcoin currency was also affected, although not as badly and it recovered fairly quickly
The split that created bitcoin gold was the idea of Jack Liao, the CEO of LightningASIC. This is a company that produces mining equipment. It appears that Mr Liao was concerned about the fact that bitcoin mining is restricted to a relatively small group of people because of the high-end, powerful computers that are needed for it.
Bitcoin gold, on the other hand, can be mined using less powerful computers. This should mean that more people get involved in it and give the currency a few wider user base to start with.
The hard fork happened on the 24th of October and people who had bitcoin at that point were given one bitcoin gold for every bitcoin. The price of the new currency fell sharply, reaching a low of $161 for each coin (£121).
It has been suggested that this drop in the price of bitcoin gold could be due to people not having confidence in the new currency. However, there is also the possibility that existing bitcoin investors simply sold off their new bitcoin gold coins in order to cash in quickly.
The new currency’s website hit problems at the outset, with a distributed denial-of-service attack causing the site to go down. In addition, comparatively few of the world’s bitcoin exchanges are dealing with bitcoin gold transactions right now.
The Second Fork in a Few Months
Of course, this is the second fork in the bitcoin currency in just a few months. Back in July, the appearance of bitcoin cash was a major milestone in the cryptocurrency world.
The value of bitcoin cash initially shot up as high as $914 (£690) before dropping down to its current value of around $330 (£249). At the time of writing, the total cash value of all bitcoin in circulation is $93 billion, while bitcoin cash is valued overall as $5.5 billion.
Among those who believe that the creation of bitcoin gold is a bad move is Sol Lederer, who is the blockchain director at Loomia. He said in an email that, “saturating the market with different versions of bitcoin is confusing to users” and pointed out that it makes people wonder about the truth of the claim that bitcoin supply is limited.
On the other hand, Bob Summerwill, who is the chief blockchain developer at Sweetbridge, said that forks like this can be a good thing. He mentioned that it is just fine when, “a crypto-community has irreconcilable differences”.
In the mid to long term, there is still a lot of positivity around bitcoin, with many analysts believing that the price is going to carry on rising over time.