Bitcoin Cash Annual Upgrade Completed with Enhanced Smart Contract Capabilities

Bitcoin Cash (BCH) successfully completed its annual network upgrade, dubbed the “VELMA” upgrade, on May 15, 2025, marking a significant step forward for the cryptocurrency’s smart contract ecosystem. This update, activated on the mainnet, introduces substantial improvements to the Bitcoin Cash virtual machine, enabling developers to create more sophisticated applications. Championed by developer Jason Dreyzehner, the VELMA upgrade focuses on enhancing the flexibility and power of smart contracts through two key Cash Improvement Proposals (CHIPs). These changes are expected to bolster the Bitcoin Cash platform, particularly in areas like decentralized finance, privacy, and quantum-resistant cryptography.

The VELMA upgrade, named for its focus on virtual machine limits, addresses constraints set by Satoshi Nakamoto in 2010. These outdated limits restricted transaction complexity and hindered modern smart contract development. By revising these boundaries, VELMA empowers developers while maintaining network security, ensuring Bitcoin Cash remains competitive in the evolving blockchain landscape. End users and BCH holders are not required to take any action, allowing them to benefit passively from the enhanced infrastructure.

Key Changes and Their Impact

The VELMA upgrade comprises two CHIPs that collectively transform the Bitcoin Cash virtual machine. CHIP-2021-05, known as Targeted Virtual Machine Limits, removes restrictive barriers such as the 201 opcode limit and increases the stack element size from 520 bytes to 10,000 bytes. This adjustment allows for larger data handling and more complex operations, enabling advanced applications like post-quantum cryptography and zero-knowledge proofs. Additionally, three new limits, operation spending, hashing, and control stack usage, have been introduced to safeguard the network against potential denial-of-service attacks, balancing innovation with security.

Complementing this, CHIP-2024-07, or BigInt High-Precision Arithmetic, eliminates the 64-bit integer limit, allowing calculations with numbers of virtually any size within the revised virtual machine constraints. This change is particularly significant for decentralized finance protocols, as it supports high-precision arithmetic essential for automated market makers, decentralized exchanges, and collateralized loan systems. The removal of this numerical cap also enhances privacy-focused technologies and quantum-resistant cryptographic methods, positioning Bitcoin Cash as a forward-thinking platform. Together, these updates significantly expand the smart contract capabilities available to developers, fostering the creation of more powerful and efficient applications.

Bitcoin Cash’s annual upgrades, like VELMA and its predecessor, the 2024 JESSICA upgrade, demonstrate the community's commitment to continuous development and improvement. By addressing long-standing limitations and introducing forward-looking features, VELMA strengthens Bitcoin Cash’s position in the crypto ecosystem. The upgrade’s focus on developer empowerment is expected to drive the creation of diverse applications, from decentralized stablecoins to cross-chain bridges, benefiting users through enhanced functionality. As the Bitcoin Cash network evolves, VELMA sets the stage for a more dynamic and competitive platform.