On May 16, 2018 Bitcoin Gold was attacked by an anonymous hacker who managed to control more than 50% of the networks hash rate, with the aim of altering transaction records. At the time, a “double spend” attack was initiated as follows: BTG tokens were sent to exchanges, and withdrawals were made to the attacker’s wallets, reversing the initial deposit transactions using altered records on the blockchain.
As a result, the BTG blockchain was charged twice for the money stolen. This attack exposed serious security flaws within the network’s security, resulting in $18 million in stolen funds. The attack was officially announced on the May 19, as an official blog post stated:
An unknown party with access to very large amounts of hashpower is trying to use ‘51 percent attacks’ to perform ‘double spend’ attacks to steal money from exchanges. We have been advising all exchanges to increase confirmations and carefully review large deposits. There is no risk to typical users or to existing funds being held.
Since the date of the attack, the price of BTG (in BTC) has fallen 43% (from 0.007104 to 0.004026).
As covered, Bitcoin Gold then planned a network upgrade aimed at improving its to prevent future breaches, which could help ease the strong bearish trend the cryptocurrency has since ben enduring.
New Protocol, New Opportunities
Before releasing its mainnet to the public, the BTG team conducted closed tests and altered its proof-of-work (PoW) protocol from Equihash to Equihash-BTG. The specs of this new PoW protocol were published on June 12, in an official blog post, in which the team emphasized enhanced security compared to the previous protocol:
The new algorithm doesn’t just protect us from ASIC miners — it moves us into a different “pool” of hashpower, which also gives us a measure of safety against the kind of 51% attacks against Exchanges that happened over three or four days this past May.
The main feature Equihash-BTG has, compared to its previous protocol, is that the amount of hashpower is significantly greater, as “it’s currently used interchangeably by multiple coins, and some of those coins produce new coins quite liberally — they generate a lot of miner rewards, which attracts a lot of hashpower.”
BTG’s version of the protocol, in comparison to regular Equihash, is better because the new algorithm requires a minimum 700MB of memory to run compared to the minimum of 50MB in the previous version.
In addition, the upgrade introduces an improved version of the difficulty adjustment algorithm that controls the cryptocurrency’s mining speed. This allows for smoother adjustments during spikes in BTG’s hashrate. Despite these improvements, BTG’s team acknowledges that these are only temporary solutions against attacks. A better solution is set to come:
While we know that this parameter change is not a permanent fix — this one change won’t stop ASICs forever — we know it will solve the ASIC-resistance problem for now, and gives us time to consider other alternatives for the longer term, if necessary.
It should be noted that this is not a contentious hard fork resulting in two blockchains, but a network upgrade deemed necessary, that can only be achieved through a hard fork. After seeing its reputation get severely damaged, BTG’s credibility depends on the upgrade.