This was covered a few days ago, but with the disruption of a hard fork so fresh in our minds I though it pertinent to bring up again. Bitcoin developer Jeff Garzik even though it important enough to post to BitcoinTalk to add to a post made earlier this week by bitcoin lead developer Gavin Andresen.
This will mainly affect miners, but everyone needs to be aware of the implications especially since it is a soft fork event.
What is happening?
BIP 34 (the BIP stands for Bitcoin Improvement Proposal) was proposed by Gavin Andresen and accepted back in July 201, BIP 34 adds block height to the coinbase. This fixes a problem that might occur if another transaction was generated in the coinbase with a duplicate hash, making the earlier coinbase transaction un-spendable.
There are two stages to BIP 34, the first stage has already been been reached when 75% of new blocks generated and a check went into place making sure that the new version 2 blocks were valid.
The next stage is about to happen any time now. Stage 2 will happen when 950 of the last 1,000 blocks (or 95%) and all older version 1 blocks will be rejected and orphaned from the chain and a soft fork will happen.
What should I do?
If you are running any version of bitcoind earlier than 7.2 upgrade immediately to 0.8.1. Even if you are running 7.2 it would be best if you upgraded to the latest bitcoind 0.8.1 in order to avoid another fork on the 15th of may.
If you are not running bitcoind and using another client to manage your bitcoin you do not need to do anything.
What could happen?
If you are mining with a bitcoind version not compatible with BIP 34 or your pool does not support BIP 34 any blocks you mine will be immediately orphaned and you will not receive the reward.
If a sufficient amount of miners and pools do not upgrade there is a potential for a full fork that would lead those miners and pools down a block chain that had no rewards.
What should happen?
If everyone (miners, pools, and users) who runs the full bitcoin client upgrades this soft fork will go into place and just continue on the original block chain.
Update: Fixes from Jeff about what BIP 34 fixed.