The proposed freeze on dormant bitcoin, valued at $78,287.12, could lead to an immediate 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 has been ongoing among bitcoin developers and industry participants, who are weighing the risks and benefits of freezing inactive tokens to protect against potential theft via quantum computing. Samuel 'Chad' Patt, founder of Op Net, cautioned that freezing any coins, including 'lost' ones, sets a precedent that could undermine the market's confidence in the cryptocurrency. '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 argued 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 discussion revolves around the estimated 5.6 million BTC held in wallets that have been dormant for over a decade, making them vulnerable to potential quantum computing attacks.
A week ago, core Bitcoin developer Jameson Lopp expressed his preference for freezing the dormant bitcoin, worth approximately $440 billion, rather than leaving it at risk of being stolen by 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. 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, CEO and co-founder at SazMining, believes that the intentions behind BIP-361 are good but argues that freezing dormant coins would undermine the core promise of inviolable property rights. 'We operate data centers on four continents, and our clients own every machine.
That model only works because Bitcoin guarantees unconditional ownership,' Halliburton said. Khushboo Khullar, venture partner at Lightning Ventures and a bitcoin maximalist, described the proposal to freeze dormant coins as 'deeply flawed,' as it would require a contentious hard fork and violate the network’s decentralized ethos. However, not all maximalists agree, with some arguing that Lopp’s proposal is sensible and that the potential risks posed by quantum computing necessitate compromise. '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,' said Ken Kruger, founder and CEO of Moon Technologies.
The debate highlights the challenges of balancing the need to protect the bitcoin network against potential threats with the need to preserve its core principles and value proposition.