We’re currently seeing a number of proposals for – and plenty of misinformation about – the activation of updates to Bitcoin’s consensus rules.
Bitcoin’s consensus rules are rules chosen by Bitcoin miners, who determine which bitcoin transactions are processed on the Bitcoin network. If miners adopt new consensus rules, those people that run full Bitcoin network nodes must upgrade their software if they wish to continue to fully validate the blocks of transactions that miners produce.
Some people may disagree with the consensus changes that miners adopt (or don’t adopt) and choose to deviate from the hash rate majority in a fork away from the main Bitcoin chain. Most often these forks are designed such that they can co-exist with the majority chain and not cause any disruption. In other cases, a majority of miners might be convinced to switch to the new consensus rules after a fork has occurred. In these situations, there is a heightened risk of deep chain re-organizations, which are disruptive to the proper operation of the Bitcoin network. There has been a lot of media attention around the possibility of such an event on August 1st.
While we’ve always held the view that there was very little risk of network disruption on August 1st, the risk was not zero. For such a disruption to occur, a majority of miners would need to switch to mining on a competing chain of Bitcoin, potentially reversing any transactions processed since the split. While risky for these miners, it is not an impossible scenario.
There is good news. The mining community has already activated the consensus changes being proposed for the competing chain. That means that on August 1st, there should be no chain split and no disruption in service on the Bitcoin network. While we will continue to monitor the situation closely, at this time BitPay has no plans to suspend service on or around August 1st.