Bitcoin Gold (BTG) About to Hard Fork to Prevent Further 51% Attacks

John Medley
  • Bitcoin Gold (BTG) to hard fork at block 536200
  • This follows the 51% attack in May, which resulted in $18 million (388,000 BTG) in stolen funds

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.

Bitcoin Gold's team

Since the date of the attack, the price of BTG (in BTC) has fallen 43% (from 0.007104 to 0.004026).

BTG.png

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.

Bitcoin Gold's team

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.

Bitcoin Gold's team

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.

Bitcoin’s Price Surges Nearly 10% to Surpass $8,000 as Crypto Market Adds $20 Billion

The price of bitcoin, the flagship cryptocurrency, has recently surpassed the $8,000 mark in a move some believe is extremely bullish and could help it go up to $20,000. What’s behind the rise is unclear, although a counter trading indicator pointed towards it.

At press time, BTC is trading at $8,055 after rising 10% in the last 24-hour period, according to CryptoCompare data. The flagship cryptocurrency’s market cap is now of $142 billion, and its recovery came merely days after it had a $1,000 ‘flash crash’ caused by a 5,000 BTC sell order.

Bitcoin's price performance in the last 24-hour period

It’s currently unclear what’s behind the cryptocurrency’s rise, although some have pointed out tensions between the United States and China may be helping, as bitcoinj’s price has been moving up when trading volumes are higher on Asian exchanges.

The U.S. recently hiked tariffs on $200 billion worth of Chinese goods, with China retaliating with higher levies on billions of dollars worth of U.S. products. These developments severely affected the stock market, and could be seeing investors hedge with bitcoin and other cryptocurrencies.

Notably, some could have predicted BTC would surpass the $8,000 mark this weekend as CNBC’s Fast Money Twitter account recently posted a bearish tweet showing a head and shoulders pattern, which implied a drop was imminent.

In the cryptocurrency space CNBC’s tweets are seen as a counter trading indicator, as often bitcoin does the exact opposite of what the financial news outlet’s social media accounts predict will happen.

The cryptocurrency’s price rise also comes as search interest for it hits a 14-month high, according to Google Trends data. This means that search interest for BTC hasn’t been this high since February of last year, when it was trading between $8,000 and $11,000.

Mati Greenspan, a senior market analyst at eToro, has noted the cryptocurrency’s price performance is bullish, and that there could be “virtually no major levels of resistance until $20,000.”

Recently, the co-founder and CEO of digital asset exchange Gemini, Tyler Winklevoss, called bitcoin “gold 2.0.” Facebook has also shown it’s getting more serious about blockchain, cryptocurrencies, and payments, which could be heightening interest in the space.

Bob Iaccino, an experience fun manager and veteran trader, has earlier this week argued that the growth of BTC’s layer-two scaling solution, the Lightning Network (LN), could also be supporting the cryptocurrency’s rally.

Altcoins Follow Bitcoin’s Rally

Available data shows that most altcoins have followed the flagship cryptocurrency’s rally, with most being up well over 3% in the last 24-hour period. Top altcoins like Ethereum’s ether, litecoin, XRP, and Zcash are all up by over 7%, with ether rising nearly 10% to trade at $258.

Interestingly Bitcoin Cash, a cryptocurrency that has recently seen a hacker take advantage of an upgrade to get miners to mine empty blocks and that has seen a mining pool have over 51% of its hashrate for a brief period, has risen over 16% in the same period. BCH is currently trading at $415.

Dash and Cosmos are other cryptocurrencies that have risen over 10% in said period. Overall the rally has seen the crypto market add over $20 billion.