Bitrated’s position regarding network splits and Bitcoin Unlimited

Mar 21, 2017 · 4 min read

Dear Bitrated customers,

With the increasing possibility of the bitcoin miners initiating a split in the bitcoin network, we wanted to take this opportunity to clarify our position regarding this and other potential network split scenarios and how we intend to deal with them.

If you’re only interested in how this applies to Bitcoin Unlimited, scroll down below.

Principles for dealing with network splits

Hardforks without industry-wide consensus

Hardforks without on-chain coordination, a grace period and clear activation strategy

Hardforks without wipe-out and replay attack protections

Hardforks to unbounded block size / “emergent consensus”

  • Unpredictable resource usage growth. As a small bitcoin business that is operating with no outside capital, we cannot in good faith commit to continuously and reliably operating a full-node that has unpredictable operational costs which could massively inflate at any time and with no warning. An unbounded block size would deny us the ability to fully self-validate the chain in a reliable and continuous manner.
  • Unpredictable network splits. Bitrated is not equipped to deal with the possibility of spontaneous network splits due to varying block-size configurations across the network. This requires considerable additional effort and diligence for keeping up with manual off-chain block-size coordination, requires short-notice devops availability for emergency server upgrades, and would put a significant burden on our support team for dealing with customers experiencing the inevitable delays and confusion when such spontaneous splits arise.
  • Degrading full-node security. Bitrated does not and will not use external API providers or SPV clients to obtain blockchain data, as we consider it unsafe and irresponsible towards our users.
    (This might change as technological improvements like SPV fraud proofs are implemented.)

For these reasons, Bitrated is technically, financially and logistically unable to safely and reasonably support networks with unbounded block size or with the “emergent consensus” mechanism.

In the case of the mainline Bitcoin client adopting an unbounded block size proposal, we will be forced to shut our full-nodes off and cease offering services for the BTC currency. We believe that this is more responsible than continuing to operate with an unreliable full-node or without a full-node at all. We will provide a grace period of 18 months during which BTC funds could be withdrawn using the Bitrated web interface, but no new deposits could be made (we’re able to safely process withdrawals without a full-node, but not deposits). After these 18 months, withdrawing funds will still always be possible using an open-source CLI tool, your account mnemonic passphrase, and your password (which together represents your multi-signature private keys).

Hardforks with industry-wide consensus, safety measures and predictable operational costs

However, even then, we will always allow withdrawing funds in the original chain used for the deposit (assuming it is technically possible).

Bitrated and Bitcoin Unlimited

  • We consider Bitcoin Unlimited to be an altcoin.
  • We cannot responsibly support Bitcoin Unlimited on the Bitrated platform as an altcoin due its lack of hardfork-related safety measures, its inherent re-org instability and its potentially prohibitive operational costs.
  • We cannot guarantee safe and orderly withdrawal of BU tokens due to the lack of replay attack protection. If you want to ensure reliable access to tokens on both sides of the fork, please withdraw your funds to an external wallet.
  • We will always guarantee the safe withdrawal of BTC under the original chain rules used for the deposit (as long as its technically possible).

If you have any comments or questions, we’re always available at

Nadav Ivgi
Founder & CEO

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