A proposal to freeze dormant bitcoin, valued at $76,462.58, could lead to immediate repricing and potentially mark one of the cryptocurrency's worst trading days since its inception in 2009, according to advocates. The debate revolves around whether to freeze approximately 5.6 million inactive tokens to protect them against potential quantum computing threats. Samuel 'Chad' Patt, founder of Op Net, notes that freezing any coins, including lost ones, sets a precedent that could impact the entire market.
'Institutional risk desks do not care about the reason, they care about the precedent,' Patt said. Market analyst Jason Fernandes agrees that a successful quantum attack would have severe repricing consequences.
'Institutions won’t just price precedent, they’ll price whether the system can survive a break in its core assumptions,' Fernandes added. The discussion follows weeks of deliberation over how to address the potential threat quantum computing poses to the bitcoin network, particularly the estimated 5.6 million inactive tokens.
A week ago, core Bitcoin developer Jameson Lopp suggested that freezing the dormant bitcoin, worth roughly $440 billion, would be preferable to leaving it vulnerable to future quantum hackers. Lopp and other developers released Bitcoin Improvement Proposal 361 (BIP-361), which contemplates phasing out bitcoin’s current cryptographic signatures and potentially freezing assets that fail to migrate. Patt warns that if this proposal proceeds, 'bitcoin’s repricing would be instant, not gradual and would be the worst single day in bitcoin's history, but not because of a hack, but because the network will have proven its core value proposition is negotiable.' Bitcoin maximalist Kent Halliburton believes that the intentions behind BIP-361 are good but argues that 'you don't defend Bitcoin by breaking its core promise of inviolable property rights.' Halliburton suggests that there are better ways to address quantum computing risks, such as improved tooling and voluntary migration. Khushboo Khullar, a venture partner at Lightning Ventures and a bitcoin maximalist, says that freezing dormant coins is a deeply flawed approach that undermines Bitcoin’s core principles of immutability, permissionlessness, and no central enforcement.
However, not all maximalists agree, with some believing that Lopp’s proposal is sensible. Ken Kruger, founder and CEO of Moon Technologies, notes that 'it’s extremely challenging to build systems that are truly future-proof, and while Bitcoin has come quite close, quantum may pose a threat that requires tradeoffs participants won’t be happy with.' Fernandes understands the concerns about precedent but believes that the risk of inaction far outweighs any concerns about philosophical purity. He argues that bitcoin could evolve to address quantum risks, just as it has in the past with upgrades like SegWit and Taproot.
Ultimately, Fernandes believes that the majority of bitcoin holders are more interested in preserving capital than preserving a vague notion of what bitcoin is 'supposed to be.'