Controversy surrounding the Bitcoin Gold (BTG) project intensified Thursday after it was uncovered that the algorithm’s developer has been allegedly profiting from a hidden fee. The news is just the latest setback for a project that has failed to win over investors.
BTG Mining Pool Fee
Rumors circulating on Bitcointalk suggest that Bitcoin Gold developer Martin Kuvandzhiev allegedly integrated a 0.5% fee into a BTG mining pool that was then directed to his cryptocurrency wallet. It was later reported by CCN and others that some mining pools removed the code as it became publicly available. This is what some members of Bitcointalk suggested in their daily musings on or about Nov. 15.
Without getting overly technical, the fee appears to have been hard-coded into the z-nomp fork, which means this was a concerted effort to raise the 0.5% revenue. Kuvandzhiev said he was aware of the embedded fee and decided not to integrate it into the main code. However, there has been no concerted effort to remove it, either.
Kuvandzhiev responded to the allegations in an interview with Bitcoin.com, where he said the code was open source all along and that it wasn’t hidden from pools that wanted to remove it.
A fee of “0.5% for a regular miner is less than a $1 a month,” he said. “Don’t act like it is too much. The other software has 1-2% fees and are closed source…”
The developer also clarified Bitcoin Gold’s premine period, which is generally known to be 8,000 blocks. Kuvandzhiev said that 60% of it is time-locked for the next three years.
Bitcoin Gold has been at the center of controversy since its developers announced plans to fork the blockchain several months ago. The hard fork was kept tightly under wraps by the protocol’s backers, leading many in the cryptocurrency community to question its integrity.
The project, which is being led by Jack Liao of LightningASIC, was intended to democratize the blockchain’s lucrative mining structure. But a failure to publicize the fork and the private mining of tens of thousands of blocks raised suspicion that Bitcoin Gold was a way for its developers to enrich themselves. An unfinished proof-of-work implementation was also raised as a potential flag.
BTG forked in late October, but officially launched this past weekend. Its value plunged immediately after the network survived an alleged attack by hackers shortly after launching.
BTG Price Levels
The ensuing controversy has left a major dent in Bitcoin Gold, with the value of the digital currency falling more than 7% on Thursday. At press time, it was seen trading at $151 on daily volumes of $29.2 million.
Prices exceeded $500 after the cryptocurrency went live during the weekend. However, it didn’t take long for prices to halve before continuing lower to their present values.
With current levels in mind, BTG has an overall market cap of $2.3 billion. According to data obtained from CoinMarketCap, much of the turnover has occurred on the Bitfinex exchange.
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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