Podcast: Bulgaria’s Martin Kuvandzhiev, Bitcoin Gold developer
Bitcoin recently peaked at a market capitalisation of $100 billion due, in part, to crypto enthusiasts selling alt coins and buying bitcoin to claim their “free dividend” of Bitcoin Gold coins.
The pump in price also came as Bitcoin Cash, a contentious hard fork, has so far failed to derail the true Bitcoin and in the hope that Bitcoin 2X in November will also fail to gain the title as the true Bitcoin.
Then the drama of Bitcoin Gold’s non contentious hard fork added to the mix of recent news. But like all Bitcoin forks, it comes with accusations of it being a fraud and a scam.
This new coin story has part of its development roots in Bulgaria. Bulgaria’s crypto credentials are looking strong with a fast-growing community that has seen an average meet-up grow from 10 people to over 150 in less than 18 months. Many Bulgarian developers and marketeers participated in 2017’s $2 billion token raising phenomenon called ICO’s (Initial Coin Offering). AEternity, a scaleable smart contract platform, and LockChain, a decentralised hotel booking service, both are token launches that have Bulgarian developers behind them.
I spoke to Martin Kuvandzhiev, one of the two developers of the new Bitcoin Gold fork. This 23-year-old from Bourgas spoke about Bitcoin Gold — the new non-contentious hard fork of Bitcoin’s blockchain. You’ll hear what a nightmare day is when your web site receives 10 million denial-of-service attacks a minute. In simple terms, it’s clear that some people were keen for Bitcoin Gold’s site to go offline. They succeeded, but not for long; it’s now back up. https://btcgpu.org
Because time was short, I could not cover all the questions that many people would have about this hard fork so I’ll elaborate some more here.
Making Bitcoin Decentralised Again
The concept of making Bitcoin decentralised again by enabling GPU mining and, in theory, reducing the reliance on Chinese ASIC mining operations is a noble objective. Bitcoin Gold aims to provide an opportunity for countless new people around the world to participate in the mining process with widely available consumer hardware that is manufactured and distributed by reputable mainstream corporations. They say that a more decentralized, democratic mining infrastructure is more resilient and more in line with Satoshi’s original vision.
However, there are few red flags that you’ll hear in the podcast and a few that I’ll express here. First, is that this fork is being launched with just two developers. That seems too few. The second is that this Bitcoin fork, which is like an ICO, causes a potential huge headaches for crypto exchanges. On one hand there is the potential for more trading margins but on the other hand there is a cost of making the coin split and changing systems to cope with the new coin.
Several crypto currency exchanges, such as YoBit, have taken the route of embracing the new currency. It could be an excellent way of gaining new clients.
The third red flag is that this is a premine coin. The team have stated that the coin has started its 8,000 block premine period. A premine coin is where the blocks are mined for a coin reward solely for the benefit of the development team. Martin answers this question along the lines of that there is no such thing as a free lunch and that it will represent just less than 0.5 per cent of the total coin in circulation. Nonetheless, this represents a big fat pay cheque of 8000 (blocks) x 12.5 BTG (block reward) = 100 000 BTG. That amounts to, at the current price of $140, a round $14m pay cheque. Martin does, however, explain that 60 per cent is locked up and therefore can’t immediately be dumped on the market.
Some would like to have seen Bitcoin Gold launched without a premine and with the code having been on a testnet with the replay protection already included. However, the Bitcoin Gold team are relying on the bounty to make sure the code is good and that it will be all worked out by the community. I have a suspicion that they may get away with it because already, since yesterday, the bounty reward has worked. The replay protection code, to prevent double spends, has been developed and successfully implemented.
The speed with which open source development can move is impressive. I can understand that new coins are developed to showcase a new feature and that, if they work, the hugely experienced Bitcoin core development team will eventually implement this.
Can Bitcoin continue to rise in price?
I have no idea. But be aware that existing holders like to promote Bitcoin because it helps the value of their coins, which they bought at lower prices. But this is true for any asset class such as gold, stocks or bonds. But what is interesting is that the demand for Bitcoin has mainly come from individuals, so far. There maybe just seven million holders – no-one really knows – but they tend to be people who are looking for a way to protect savings and the fear that fiat currency will increasingly be worth less, as more is printed. History has always taught us this will be so and Bitcoin’s finite 21 million coins seems an attractive proposition when framed like this.
Increasingly more people value privacy. The growth of privacy messaging services such as Telegram, Signal, What’s App, iMessage and others is evidence of this trend. The concept of a censorship-resistant and decentralised store of value becames more widely appreciated.
The dream of a world currency, as well as a reliable store of value, these can only come true if the Bitcoin transaction fees come down close to zero. The good news is that will happen with the Lightening network, and is already happening as the new Segwit code is adopted by more Bitcoin wallets, 2018 may turn out to be the year when Bitcoin’s protocol makes these giant leaps forward.
As for the massive price volatility, this makes pricing goods in Bitcoin unrealistic, for now. I can see volatility reducing if the market capitalisation of bitcoin reaches $1 trillion. More than 10 times the current price. With over 50 Bitcoin hedge funds about to be launched, that may move things in that direction. Bitcoin needs to reside in a registered product without the difficulty of personal storage for the really big money to be interested in investing a small part of their portfolio in crypto assets.
While the Bitcoin project could ultimately fail, the progress so far is impressive. Bitcoin Gold is controversial for now, but I have a feeling that not only will we be witnessing the young Martin Kuvandzhiev help put Bulgaria on the crypto map but Bitcoin Gold may turn out to surprise us all and be more popular than much of the Bitcoin media first predicted.
Martin’s work at SoftUni in Sofia, his recent Sofia blockchain meet up and his ability to learn so fast and communicate are impressive. Expect to hear more on Bulgaria as an important centre for the development of blockchain technology and about Martin, as one of the most influential people in Sofia.
Disclaimer: This is an opinion piece and is not investment advice. You’re all big boys and girls and you know to never to invest any of your cash in Bitcoin or another crypto token that you can afford to lose all of it, without worrying. This is still one giant experiment and it could fail and is a space full of scammers and pumpers. Be smart and do your own research.
The podcast:
