Earlier this year, we expressed our support for SegWit and UASF – two Bitcoin scaling solutions. As many of you may be aware of, currently, Bitcoin’s scaling debate is at a crucial phase. Upgrades to the Bitcoin network will be implemented shortly, hopefully ensuring the network’s proper functionality in the long term.
The information below is therefore highly relevant to CoinGate Merchants and Traders. Please read on to understand what will be happening with Bitcoin and our services during the upcoming days.
UPDATE #7 (August 3): All our operations have fully returned to normal. We will no longer wait for additional confirmations on the Bitcoin network for transactions sent to our invoices, and Bitcoin (BTC) withdrawals are now paid out as usual.
UPDATE #6 (August 2): The Bitcoin network split took place without causing any disruptions on CoinGate services.
Our operations continue as usual (BTC withdrawals are still halted, but will not be delayed by more than 72 hours counting from August 1, 06:00:00 UTC).
Coinbase and other web wallets seem to have ceased delaying Bitcoin transactions, as such very few transactions are reaching our merchant invoices late – paid orders are back to numbers we were used to before chain split.
UPDATE #5 (July 31): We will temporarily suspend BTC withdrawals starting August 1, 06:00:00 UTC time. We plan the suspension to last from 24 to 72 hours.
UPDATE #4 (July 31): We have increased the number of required Bitcoin network confirmations to 6 for all transactions.
UPDATE #3 (July 28): It now seems very likely, that we will have to suspend BTC withdrawals for up to 3 days, starting August 1. The reason for this is the Bitcoin network split, called Bitcoin Cash, which is planned by a small minority of miners.
Even though the split is scheduled to happen on August 1, it is a very new development that is in no way related to BIP148/UASF, for which we have expressed support previously. CoinGate, nonetheless, has prepared for the planned network split to ensure that our payment processing service can continue without disruption.
However, we do not plan to support Bitcoin Cash (BCC/BCH) payments natively at the moment i.e. we shall not offer Bitcoin Cash withdrawals, and we will not accept direct customer transactions made with Bitcoin Cash. Nevertheless, we might integrate Bitcoin Cash payments via a third party service such as ShapeShift once such functionality becomes available. In case a customer sends Bitcoin Cash directly to one of our invoices by accident or on purpose, we will be able to refund them. Therefore, at no point during the process will our users face risk of “losing” any BTC or BCC.
Whether CoinGate will support Bitcoin Cash payments natively on our gateway in the upcoming future will depend on market conditions, adoption of the forked chain by major exchanges as well as regular users, and the demand for Bitcoin Cash payments by our merchants.
UPDATE #2 (July 28): We have reduced the number of required Bitcoin network confirmations to 3 for all transactions. It will be raised to 6 (or more) again before August 1.
UPDATE #1 (July 23): At the moment, it seems that the Bitcoin network upgrade process should go smoothly. Nonetheless, we have enabled waiting for 6 Bitcoin network confirmations for all transactions as a temporary security measure. We will publish any changes to the situation by updating this post.
In case the Bitcoin’s Blockchain splits (i.e. a hard fork occurs), CoinGate service for buying and selling Bitcoin will most likely be shut off for several days to avoid any issues with payment settlement.
The service will be re-introduced once the turmoil calms down and our team feels that a degree of stability of the Bitcoin network(s) is sufficient to provide our customers with a quality service once again.
We are constantly monitoring the situation and will do everything in our power to minimize the disruption of our merchant payment processing services whether a hard fork occurs or not.
Our team has devised several contingencies in preparation for the potential network split. Below is a list of possible measures alongside their respective likelihoods that we might implement to our Merchant payment processing engine.
(none of the measures in this list will be implemented for sure, they might or might not be, depending on Bitcoin network conditions)
- A period of longer confirmation times (very likely), i.e. we will wait for several Bitcoin network confirmations (most likely 6, but might be up to 30) for all merchant payments. This period might happen at any time from July 21 to August 4, and might last from several hours to several days. This measure, if implemented, will help us tackle the high risk of increased orphaned block rates (an orphan is a block which belongs to a “losing” branch in a temporary blockchain split).
- Temporary suspension of payouts / withdrawals (average likelihood). This might last from 24 to 72 hours. Payouts / withdrawals will only be suspended if the network splits.
- Complete suspension of payment processing service (unlikely; a last resort if things go bad). This period might last 1 to 12 hours. In case this happens, the customers will see a message on the invoice explaining the situation, whereas the QR code, amount, address, etc will not be shown. Payments made before the suspension happened, will not be lost, but might be delayed significantly.
After the Bitcoin Scaling Upgrades
In case of a permanent split, we might choose to support one, or both, of the branches. In any case, CoinGate will do everything in our power to protect our Traders, Merchants, and their customers.
Even if we eventually choose to support only one branch, we will still receive the transactions on another branch as well, and so we will be able to refund any transaction sent to us. This means that if you are accepting Bitcoin payments via CoinGate, your customers will not be facing any risk of “losing” their bitcoins (whichever branch they belonged to) if they send them to CoinGate invoice addresses.
We will keep all our users informed of any ongoing developments related to Bitcoin scaling by continuously updating this post.
The CoinGate Team