The potential freezing of dormant bitcoin, valued at $76,351.33, could trigger a sudden and drastic repricing, marking one of the most tumultuous trading days in the cryptocurrency's history since its inception in 2009, according to advocates. The debate surrounding the freezing of dormant tokens to protect against quantum computing threats has been ongoing among bitcoin developers and industry participants.
Samuel 'Chad' Patt, founder of Op Net, cautioned that freezing any coins, including 'lost' ones, sets a precedent that could impact the entire market, as it implies that the ownership of the approximately 19.8 million BTC in circulation is conditional. Institutional risk desks, Patt noted, are more concerned with the precedent than the reason behind it. Market analyst Jason Fernandes, a self-described pragmatic maximalist, concurred with Patt's assessment but believes a successful quantum attack would have far more severe 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 on how to address the potential threat quantum computing poses to the bitcoin network, particularly the estimated 5.6 million BTC held in wallets that have been dormant for over a decade.
These tokens are vulnerable to quantum computing attacks due to the lack of upgrades to their addresses. A week ago, Jameson Lopp, a core Bitcoin developer and research analyst, expressed his preference for freezing the dormant bitcoin, worth roughly $440 billion, rather than leaving it at risk of being stolen by future quantum hackers. Lopp and a team of core bitcoin 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.
If this proposal were to proceed, Patt warned that '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.' Another bitcoin maximalist, Kent Halliburton, CEO and co-founder at SazMining, believes the intentions behind BIP-361 are good but argues that defending Bitcoin by breaking its core promise of inviolable property rights is not the solution. Halliburton advocates for better tooling and voluntary migration instead of a protocol-level confiscation. Khushboo Khullar, venture partner at Lightning Ventures and a bitcoin maximalist, described freezing dormant coins as 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 Lopp's proposal is sensible. Ken Kruger, founder and CEO of Moon Technologies, noted that building systems that are truly future-proof is extremely challenging, and while Bitcoin has come close, quantum computing may pose a threat that requires tradeoffs. Fernandes understands the concerns about precedent but believes that framing this as a question of purity misses the bigger issue: quantum risk is an existential threat to the system, not a philosophical debate. He thinks bitcoin could evolve, as it has in the past with upgrades like SegWit and Taproot, to address the quantum risk.
Ultimately, Fernandes believes that the majority of bitcoin holders are more interested in preserving capital than preserving a notion of what bitcoin is 'supposed to be.' Mati Greenspan, a self-described maximalist and market analyst, echoes this sentiment, stating that 'doing nothing is better than doing something' and that the Bitcoin community seems to feel strongly that freezing coins would be antithetical to bitcoin's quintessential value proposition.