How miners, exchanges, and other businesses can make sure the next Bitcoin Cash network upgrade goes smoothly.
We want to make sure all businesses know the facts, so we created this simple guide to help you cut through the noise and make an informed decision on how best to prepare for the network upgrade.
A summary of the situation
On November 15, Bitcoin Cash will undergo its next network upgrade. After the upgrade, Bitcoin ABC software will continue to be fully compatible with the Bitcoin Cash protocol, whereas alternative node implementations will become BCH-incompatible.
What do businesses need to do?
You need to make sure you’re running a fully compatible node software before the network upgrade. You can do that by downloading and deploying Bitcoin ABC 0.22.0 or later, which protects you from chain wipeout in the event of a split and keeps you on a chain that has reliable development funding moving forward.
What happens if I run BCH-incompatible node software?
If your node software does not implement the rules of the Bitcoin Cash network, you could end up on a new chain or no chain at all. For miners, this risks profit loss through chain wipeout or orphaned blocks. For exchanges and other businesses, it risks transaction uncertainty as blocks get reorganized.
What’s the main benefit of the upgrade?
The Bitcoin Cash network will fund its own infrastructure development. It can therefore compete with tech giants like Google, Facebook, and Microsoft to consistently compensate in-demand software engineers, who will be hired to develop the roadmap. That means businesses will be building on a properly maintained network which has the potential to bring in significantly more users as it scales to become global peer-to-peer cash.
What miners need to know
Your profits will be 100% secure with our software
By running Bitcoin ABC software, you can be confident that 100% of your profits are secure. This contrasts BCH-incompatible software like BCHN, which can result in total profit loss through:
- Orphaned blocks: if the majority of miners run Bitcoin ABC, no new chain will form. Miners running BCHN or other BCH-incompatible software will lose 100% of their revenue when the blocks they find are orphaned.
- Chain wipeout: if the majority of miners run alternative software, a new chain will form. Since the rules of the new chain are strictly more permissive, the software powering it will accept blocks that include the new coinbase rule. This means the new chain will be wiped out if the Bitcoin ABC-powered chain becomes longer, resulting in 100% revenue loss for miners running BCHN or other BCH-incompatible software.
Our recommendation: unless alternative node implementation teams add replay protection or other measures to prevent block reorganization, we strongly recommend miners not to use their software due to the risk of total profit loss.
Mining revenue will only be reduced by 0.2%
The new coinbase rule does not reduce your Bitcoin Cash mining profitability by 8%. Due to difficulty adjustment, the cost is shared across the whole SHA-256 ecosystem. So, at the current BCH/BTC price ratio, that means the SHA-256 mining revenue will be approximately 0.2% less for BCH, BTC, and all other SHA-256 miners.
Your earnings should rise in value as demand increases
By reinvesting 0.2% of the total SHA-256 profitability into infrastructure development, miners should profit more in the long-term as the value of the network increases. The lead node implementation will have the funding it needs to finance Bitcoin Cash roadmap development, and major miners and holders will oversee the funding of broader infrastructure projects to bring further value to the network.
In contrast, a chain powered by BCH-incompatible software like BCHN would continue to rely on donations to fund development. This slows development and can even lead to development capture (like Blockstream with BTC), which ultimately diminishes the incentive to develop the network itself.
What exchanges and other businesses need to know
Your customers’ transactions will be final with our software
By running Bitcoin ABC software, you can be confident that transactions your customers send are final. This contrasts BCH-incompatible software like BCHN, which could result in transactions disappearing in two ways:
- Orphaned blocks: if the majority of miners run Bitcoin ABC, no new chain will form. Exchanges and other businesses running BCHN or other BCH-incompatible software risk seeing their customers’ transactions disappear.
- Chain wipeout: if the majority of miners run alternative software, a new chain will form. Since the rules of the new chain are strictly more permissive, the software powering it will accept blocks that include the new coinbase rule. This means the new chain will be wiped out if the Bitcoin ABC-powered chain becomes longer. As such, exchanges and other businesses running BCHN or other BCH-incompatible software will see their customers’ transactions disappear.
Our recommendation: unless alternative node implementation teams add replay protection or other measures to prevent block reorganization, we strongly recommend exchanges and other businesses not to use their software due to the risk of transactions disappearing.
Your business will benefit from a properly maintained network
Since the coinbase rule provides us with reliable funding, we will be able to hire a growing team of technical experts to develop the Bitcoin Cash network. That means the network your business builds on will be properly maintained, so things can run more smoothly.
Your business should see an increase in new customers
As we hire more technical talent new features, such as transactions being confirmed in seconds, will come to Bitcoin Cash more quickly. That means your business will be able to function more efficiently.
Similarly, as the network becomes better and demand increases, you should see an increase in the number of new customers using your products and services. Ultimately, we are working to develop Bitcoin Cash into sound money for the world, which means your business can expand its customer base as the network scales.
What you can do to get prepared now
Update your node software
You can download the latest version of our software here. Once you are running Bitcoin ABC 0.22.0 or later, your business is prepared for the network upgrade. Miners and pool operators should check that their pool software works with the new coinbase rule.
Verify on the testnet
Reach out for technical support
We hope this guide has answered your questions but, if you need any more technical support, you can always reach out to our team by raising a ticket.