Category: Tenx (PAY)

Bitcoin Gold — All you need to know — Transcript

Below is a full transcript of the video.

Welcome to this video, my name is Julian, one of the co-founders at TenX.

When there is a new coin, a new fork or something new happening, we get a lot of questions on how we are going to treat it, how do we see it, what is our input as investors and as a company.

Today, I want to give you an insight on how I personally view Bitcoin Gold, as well as how we as a team, as a company treat Bitcoin Gold within our app, on our card.

Please keep in mind that anything I say on this video is in not investment advice. Everything I do here is more on a personal level, where I try to educate the people out there. But obviously I do understand that you want to know how we in the company treat such new forks.

Let’s start with “What is Bitcoin Gold?”

Bitcoin Gold was announced as a fork of Bitcoin. While people conduct ICOs on Ethereum, on Bitcoin, they attempt to fork the main chain. The reason they are doing this and not starting a new coin, is simply because it would not be as exciting to have an “XYZ Gold” coin as compared to a “Bitcoin Gold” coin. Just from a marketing perspective, this allows for great search engine optimisation, taking advantage of the attention and focus.

I’ve linked the official website of Bitcoin Gold and Bitcoin Talk below so that you can look up the official things while I highlight and summarise a couple of key points.

“Why are they forking”

There are many reasons to fork, but their main focus is “Bringing Decentralisation back to Bitcoin”

To me, when I hear this “Make something something again”, I simply cannot hear it any further.

“Let’s make Bitcoin decentralised again.” That’s their slogan. Basically what they mean by this is the following. Mining it Bitcoin has been quite centralised. There are large mining communities that control almost all of the mining. This is compounded by the advent of ASIC miners, which prevents the average Joe like you and me to mine Bitcoin. So their solution is to change the mining algorithm. Bitcoin Gold wants to go away from SHA256 and towards Equihash. This is because it is ASIC-resistant, which allows people to mine it with GPUs. While you can mine Bitcoin with GPUs, it is not as profitable.

The main reason behind this can be perceived as economic. I, however, feel that the fork is politically and ideologically driven, and even a little bit of a scammy drive, but I will address that later on in the video.

That form of mining allows NVIDIA and AMD to enter the mining market, because Bitmain, for example, has a large share of the current market. This allows other providers to enter the ecosystem.
Bitcoin Gold has a different mining algorithm, they are going to keep Segwit, which is very different as compared to Bitcoin Cash. They are going to have a variable blocksize, 1MB, so basically this blocksize debate which we have with 2X, which is coming up and I am also going to make a video on that. That variable blocksize is also a relevant thing for Bitcoin Gold. That summarises most of the differences.

So, you could sit there and say, we have Bitcoin, Bitcoin Cash, Bitcoin Gold, and a potential 2X, I don’t understand it! To be honest, neither do I. So let’s try to understand it a bit better, both from an economic and political perspective.

There are two very important things whenever you try to fork Bitcoin. Firstly, you have to adjust the mining difficulty. This works in a way, and I don’t know if you have ever heard my explanation of the mining, where you send the transaction, and you sign it with your private key, you create something like a puzzle piece, which is unique. The miners try to fit these puzzle pieces into their block so that their block looks a certain way. In mining language, that it starts with a certain number of zeros. The hash that comes out, where all these transactions get hashed and there’s a certain number of zeros that come out. You don’t know as a miner, what kind of puzzle piece you add to get these zeros. It’s a very random process, so there is no other way to do it except for brute force.

On average, the entire network takes roughly 10 mins to find out how this puzzle should look like, and for it to match the mining difficulty. If you fork Bitcoin, without adjusting the mining difficulty, what’s going to happen is if you have 10% of the mining power, it’s going to take you 10 times as long for the next block. If you have 1% of the mining power, then you need 100 times as long to match these puzzle pieces together, to find the right block. That’s 1000 minutes! That’s really really long, we are talking about 16 hours for one block.

That’s a very important question. Which of the miners would trust a system where the mining difficulty might be super super long, where I do not know how much I am going to get out despite investing all of this money and electricity. Hence, it is very important that the mining difficulty gets adjusted. Bitcoin Cash, for example, adjusted the mining difficulty, but even for them it was quite challenging in the first number of days to have a proper block time, showing how difficult it actually was. If you do not have the support and massive finances behind it, you are not going to have the grit to stick it through and will say “Screw it, I’m going to mine something else”

I think that’s a very important fact here. So, one key aspect of how good Bitcoin Gold is going to be is how good they are going to be in adapting the mining difficulty. I’m going to have some comments on that because the question obviously is “When is the fork actually happening and what does it look like,” but a bit more of that in a second.

There’s something else, there’s a second more important part when you fork, which is called “replay” The first time we saw replay was a bit over a year ago, when Ethereum and Classic split off. Suddenly, we had all these replay attacks. What this basically means is if you fork, the history of the blockchain is the same for both chains. If you owned a Bitcoin before, you own, still a Bitcoin, but now suddenly you get a free new coin which is Bitcoin Gold. This can actually be quite dangerous, and I’m going to explain why. Suddenly, you have these two coins, and whenever you try to make a transaction on either chain, remember, transaction, from, to, how much, timestamp, you get a unique transaction ID.

And this unique transaction ID happens because you signed that transaction with your private key. No one can back-calculate from your transaction ID to your signature. So in theory, nobody can use the transaction somewhere else. But, because the blockchains are identical, in theory, if you send Bitcoin Gold to someone, that person can replay, can copy, that transaction on the Bitcoin chain. So this can be really dangerous if there is no replay protection installed. In a replay protection, like Bitcoin Cash installed, you can’t just replay the transaction on either chain because there are some changes to ensure that the transactions don’t match. But imagine, and at the moment, and I just checked the Bitcoin Gold github repository, they are still trying to figure out how replay protection could work- I’m not even sure if they want it. To me, this sounds really strange.

I’m filming this on a Sunday the 23rd, so maybe by the time you are watching this, they have solved that. I hope so, because what could happen is this. You send someone Bitcoin Gold, and the next moment your Bitcoin are gone. And you’re like “How the heck did my Bitcoin disappear?” But it’s very simple, someone replayed your transaction from Bitcoin Gold over to Bitcoin. And that’s something that’s insanely dangerous. You might get Bitcoin and Bitcoin Gold, and you’re like “Alright, I don’t want the Bitcoin Gold, let me just send it to somewhere. And suddenly your Bitcoin are gone” And that’s why, many many people, and I don’t want to say including me, but I am also hesitant, view Bitcoin Gold as a Trojan Horse.

I see it in a way where there is a group that have not thought things through well enough. This is my personal opinion, and no way reflects the stand of the company. I asked myself a couple of questions “Why hasn’t this been thought through better? Why are there essential features such as replay protection still not worked out?” The plan is to get the genesis block of Bitcoin Gold on the 25th of October, which is in two days. Last I checked on the repository, replay protection has not been implemented. “Why is this happening?”

One of the reasons this could be happening, I’m not saying this is me suggesting it, is that this group says that this group is going to confuse Bitcoin Gold with Bitcoin Cash, and somehow we are going to get all this Bitcoin Gold, and by people sending us this Bitcoin Gold, we are going to get their Bitcoin as well. At the moment, there are not many wallets and exchanges that have suggested that they are going to provide support for Bitcoin Gold. This includes TenX.

At TenX, we do not intend on providing support for Bitcoin Gold, unless we see that Bitcoin Gold is going to be successful, and at the moment, we have some really big doubts. Imagine, there’s a service that says “Send us your Bitcoin Gold, we are going to take care of it, change it or whatever,” and in the next second, your Bitcoin is gone as well, because they just replay that. Thats something thats insanely dangerous for you as a user if you do not pay attention.

The only thing you can actually do is to split your coins properly to use a so called customised replay protection, or just do not do any Bitcoin or Bitcoin Gold transactions until this matter is solved, which is my recommendation. If you do find out that Bitcoin Gold is not going to have replay protection, then you should not do any Bitcoin or Bitcoin Gold transactions for quite some time until this is solved. This is something that is very ridiculous to me, that I have to worry about sending Bitcoin transactions just because there is a fork happening. Maybe a lot of wallet providers get confused, some exchanges, and this is going to be quite a challenge if the replay protection does not get incorporated properly.

I hope you share this video, because there are not many people out there that understand how dangerous a fork can be if replay protection is not there. I hope that I was clear on how replay protection works. But there is something else that is really strange about Bitcoin Gold. The entire “When does it get forked” has not been published, at least when I last checked.

The genesis block is supposed to be happening on October 25th. That’s when there’s a snapshot being taken and basically from there, everything gets forked. But there have been some valid voices out there that mentioned that the fork may have already happened in the past, and Bitcoin Gold has just been mining during this time for themselves, so that they can start with a certain amount of blocks and a certain amount of Bitcoins. There have been talks about them doing an ICO, which has been dismissed. Then now they want to do an entire set of pre-mining, maybe the fork is going to happen on October 25th, but the coins will only be available to everyone maybe one week or two weeks later. And there’s a lot of questions. To me, personally, when Bitcoin is seen with this, and there’s so much uncertainty, this is not very good for the entire ecosystem. That thing can go south quite fast if we don’t pay attention because what’s going to happen is that some users might lose their Bitcoin. This is really dangerous. Some users might get totally confused and think that Bitcoin, Bitcoin Cash and Bitcoin Gold are all the same anyways.

What this shows to me is a couple of interesting things. It shows to me that these attacks- I really call them almost attacks, on the forks, unto Bitcoin, can be seen as deliberate, trying to get money for these groups who try to fork, but it can also be just seen as “what doesn’t kill you make you stronger.” That’s something I really see for Bitcoin at the moment. I see Bitcoin being challenged, Bitcoin is at an All Time High, and it is very important that you are being challenged as the global cryptocurrency leader that just broke a total of a hundred billion dollars, which is an insane amount if you think about it.

That is something I see from a personal standpoint, and for you, as a user, just own your private keys. Remember, at TenX, we do not provide the private keys to you at the moment. We will change that in the future, but for now, only keep the coins on our wallet if you intend on spending them straight away. Do not keep coins on our wallet just to store them, because you do not own your private key. If you own your private key, in case there’s a fork, and in case there’s anything actually happening, you are going to have your original Bitcoin and you’re gonna have Bitcoin Gold. Then check if there is replay protection, because if there’s no replay protection, simply sit still a bit, and wait until replay protection is being installed.

If you’re watching this and not in crypto yet, or you’re thinking of buying into Bitcoin, then here is a couple of things. No one knows what a cryptocurrency is doing, no one can predict the future. It’s literally impossible. So if you’re thinking about “should I get into Bitcoin” or “Should I get out of Bitcoin”, here are a couple of thoughts. These are things that I discuss within my group, individuals who are really really smart and inspire me with a lot of their thinking so that I can start and put in my own thing.

Whether you want to get into Bitcoin or out of Bitcoin, maybe do it in steps. Say “you know what, I’m going to put half, or a third of my money into Bitcoin right now or I’m going to take half of my money out because what do I know what Bitcoin is going to do” Because, what’s going to happen is, it’s not before the fork, you can put in another third or another half after a potential Bitcoin Gold fork, and you wait with another half or another third until after a potential 2X fork. And you might get a very nice average, because who knows, we could go from 6000 to 10000, or we could go from 6000 to 3000.

Don’t put all the chips unto one bet. This is something that I feel is very important when you have such turning points. We have two in a row now, the Bitcoin Gold one now, and the 2X one. I’m going to make a separate video on 2X because there are a lot of other challenges when we have those, and obviously what is our stance at TenX when it comes to these challenges.

I hope this cleared up to you what Bitcoin Gold is, obviously a lot of my personal opinion in this, but also what we are going to do at TenX with Bitcoin Gold and what does it mean to you, what are a couple of things that you should pay attention to, and these things are quite important.

Obviously, be in touch with us, be part of our new Riot chat group, be part of our Facebook, be part of our Twitter, and stay up to that. I would really love that. If you want to see more of these videos of TenX updates, remember we do Tuesdays and we post updates every week, both specifically for TenX and the ecosystem in general and how these things affect us here at TenX. At the end of the day, we want to educate our users and token holders, we want to do something for the entire ecosystem. We want to bring cryptocurrencies to the masses, so we need to take a couple of steps ahead once in a while.

If you want to have more of that, subscribe to our Youtube channel, it would be a pleasure to have you here as a regular guest.

At the very end, let me know your opinion of Bitcoin Gold in the comments below. Is it totally legit? It is a scam? Do you trust it, are you gonna buy it, are you gonna sell it? It would be interesting for me to see how the market perceives it.

With that, thanks so much for watching and I’ll see you at the next video.

Yours truly, Julian.

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Bitcoin Gold — All you need to know — Transcript was originally published in TenX on Medium, where people are continuing the conversation by highlighting and responding to this story.