A proposal to freeze dormant bitcoin, currently valued at $78,092.20, could trigger an immediate and drastic repricing, marking one of the most significant trading days for the cryptocurrency since its inception in 2009. This concern has been voiced by advocates who spoke with CoinDesk, highlighting the potential risks associated with quantum computing. For weeks, bitcoin developers and industry participants have debated whether to freeze inactive tokens to safeguard them against potential theft via quantum computers.
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 suggests 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 said. Market analyst Jason Fernandes, who describes himself as a pragmatic maximalist, concurred with Patt's assessment but emphasized 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 inactive for over a decade, making them vulnerable to potential quantum computing attacks. Core Bitcoin developer Jameson Lopp suggested freezing these dormant bitcoin, valued at roughly $440 billion, to prevent their potential theft.
Lopp and other developers have proposed Bitcoin Improvement Proposal 361 (BIP-361), which considers phasing out bitcoin’s current cryptographic signatures and potentially freezing assets that fail to migrate. Patt warned 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.' He added that all fund managers who allocated based on the censorship-resistance thesis would be forced to unwind their positions due to the changed risk profile. Another 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.
'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 approach as 'deeply flawed,' as it directly undermines Bitcoin’s core principles of immutability, permissionlessness, and no central enforcement. 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 acknowledged the concerns about precedent but emphasized that the quantum risk is an existential threat to the system, rather than a philosophical debate.
He believes that bitcoin could evolve, as it has in the past, to address the quantum risk while preserving its core value proposition. Ultimately, the decision to freeze dormant bitcoin or not has significant implications for the cryptocurrency's future, with many maximalists preferring to maintain the status quo and avoid setting a precedent that could undermine the network's core principles.