The possibility of freezing dormant bitcoin, valued at $77,128.01, could have a profound impact on the cryptocurrency market, potentially triggering a massive repricing and marking one of the worst trading days in bitcoin's history since its inception in 2009, according to advocates. This debate has been ongoing among bitcoin developers and industry participants, who are weighing the risks of quantum computing threats against the potential consequences of freezing dormant tokens. Samuel 'Chad' Patt, founder of Op Net, cautioned that freezing any coins, including 'lost' ones, would set a precedent that could undermine the market's confidence in bitcoin's ownership model. 'Institutional risk desks do not care about the reason, they care about the precedent,' Patt said.
Market analyst Jason Fernandes, a self-described pragmatic maximalist, concurred with Patt's assessment but believed that 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 debate surrounding the potential threat of quantum computing to the bitcoin network has been ongoing, with some experts advocating for the freezing of dormant bitcoin, estimated to be around 5.6 million BTC, to prevent potential theft.
However, others, such as Mati Greenspan, a market analyst and self-described maximalist, argued that if quantum computers were to crack early Bitcoin wallets, it would not trigger a rollback or freeze but rather the largest bug bounty in human history. The discussion follows the release of Bitcoin Improvement Proposal 361 (BIP-361) by Jameson Lopp, a core Bitcoin developer, and other developers, which proposes phasing out bitcoin’s current cryptographic signatures and potentially freezing assets that fail to migrate.
Patt warned that if this proposal were to proceed, '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, expressed concerns that freezing dormant coins would undermine bitcoin's core promise of inviolable property rights. 'You don't defend Bitcoin by breaking its core promise of inviolable property rights,' Halliburton said.
Khushboo Khullar, venture partner at Lightning Ventures and a bitcoin maximalist, also argued that freezing dormant coins is a deeply flawed approach, as it directly 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 a sensible solution to the potential quantum threat.
Ken Kruger, founder and CEO of Moon Technologies, said, '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 emphasized that the risk of inaction far outweighs any concern about precedent or philosophical purity, and that bitcoin could still evolve to address the quantum threat, 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 specific notion of what bitcoin is 'supposed to be.' Greenspan concluded, 'The Bitcoin community seems to feel strongly that freezing coins would be antithetical to bitcoin's quintessential value proposition.'