- The price of bitcoin took a hit after the cryptocurrency underwent another split, with the newly-created bitcoin gold seeing its value plunge over 60 percent.
- Bitcoin hit a low of $5,374.60 on Wednesday before recovering nearly $300.
Bitcoin underwent another “hard fork” that resulted in the creation of bitcoin gold.
@CNBC: Bitcoin splits again, creating a new cryptocurrency called bitcoin gold that plunged 66%
The price of bitcoin took a hit after the cryptocurrency underwent another split, with the newly-created bitcoin gold seeing its value plunge over 60 percent.
Bitcoin hit a low of $5,374.60 on Wednesday before recovering nearly $300. The initial fall followed the “hard fork” that occurred Tuesday.
Firstly, it’s important to understand how the bitcoin system works. Transactions by users are gathered into “blocks” that are turned into a complex math solution. So-called miners, using high-powered computers, work these solutions out to determine if the transaction is possible. Once other miners also check the puzzle is correct, the transactions are approved and the miners are rewarded in bitcoin.
The need for high-end machinery has meant that mining is controlled by a small group of people with powerful computers.
Jack Liao, the CEO of LightningASIC, which sells mining equipment, came up with bitcoin gold as a way to change this dynamic.
The idea is to allow bitcoin gold to be mined by more people with less powerful machines, therefore decentralizing the network further and opening it up to a wider user base.
To this end, the collective behind bitcoin gold came up with a code that creates a “fork” or split in the bitcoin blockchain. That occurred on October 24 and resulted in the creation of the bitcoin gold cryptocurrency.
Yes. In July, bitcoin underwent a similar fork that led to the creation of bitcoin cash.