According to advocates, freezing dormant bitcoin, currently valued at $77,111.57, would instantly trigger a significant repricing, potentially marking one of the worst single-day performances in the cryptocurrency's history since its inception in 2009. The debate surrounding the proposed freezing of inactive tokens to safeguard against potential 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, would set a precedent, implying that the approximately 19.8 million BTC in circulation are conditionally owned.
'Institutional risk desks do not care about the reason; they care about the precedent,' Patt emphasized. Market analyst Jason Fernandes, a self-described pragmatic maximalist, concurred with Patt's assessment but warned that a successful quantum attack would have far more severe repercussions.
'Institutions won't just price precedent; they'll price whether the system can survive a break in its core assumptions,' Fernandes added. The discussion revolves around the estimated 5.6 million BTC, valued at roughly $440 billion, which have been dormant for over a decade and are therefore vulnerable to potential quantum computing attacks.
A week ago, core Bitcoin developer Jameson Lopp expressed his preference for freezing the inactive bitcoin rather than leaving it exposed to potential theft by future quantum hackers. Lopp and other core developers recently introduced Bitcoin Improvement Proposal 361 (BIP-361), which proposes phasing out bitcoin's current cryptographic signatures and potentially freezing assets that fail to migrate.
If implemented, 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.' Bitcoin maximalist Kent Halliburton argued that while the intentions behind BIP-361 are good, 'you don't defend Bitcoin by breaking its core promise of inviolable property rights.' Halliburton suggested that there are better ways to address the risks posed by quantum computing, such as improved tooling and voluntary migration. Khushboo Khullar, a venture partner at Lightning Ventures and a bitcoin maximalist, described the proposal to freeze dormant coins as 'deeply flawed,' as it undermines Bitcoin's core principles of immutability, permissionlessness, and decentralization. However, not all maximalists agree, with some, like Ken Kruger, founder and CEO of Moon Technologies, believing that Lopp's proposal is sensible and that tradeoffs may be necessary to address the quantum threat. Fernandes emphasized that the protocol isn't 'finished' and can evolve, as it has in the past with upgrades like SegWit and Taproot.
Ultimately, Fernandes believes that the majority of bitcoin holders prioritize preserving capital over preserving the cryptocurrency's core values.