New Proposal Enables Bitcoin Holders to Prove Ownership Without Revealing Identity

Concerns about quantum computing have long plagued Bitcoin, and a significant issue is the potential vulnerability of millions of bitcoin in old wallets with exposed public keys. This includes the approximately 1.1 million bitcoin attributed to the pseudonymous creator Satoshi Nakamoto, valued at around $84 billion. A proposed solution involves a soft fork that would gradually phase out legacy address types, forcing holders to move to quantum-safe formats. However, this approach poses a challenge for long-dormant holders like Satoshi, who would need to publicly reveal their identity or risk losing access to their assets. To address this issue, Dan Robinson of Paradigm has proposed a concept called Provable Address-Control Timestamps (PACTs), which enables holders to generate a private proof of ownership without spending any coins. This proof is then timestamped and stored privately, allowing holders to reveal it only when they need to spend their coins. The proposal relies on the use of a random salt, BIP-322, and OpenTimestamps to create a unique and unguessable cryptographic commitment. If Bitcoin adopts a soft fork that freezes quantum-vulnerable coins, the protocol could include a rescue path that accepts a zero-knowledge proof, enabling holders to spend their coins without revealing any sensitive information. This approach also addresses a gap in a previous proposal (BIP-361) by providing a rescue path for wallets derived through BIP-32. While PACTs offer a potential solution, they require Bitcoin to adopt a STARK verification protocol, which would necessitate a separate soft fork with broad community consensus. The proposal highlights the complexities and challenges involved in protecting Bitcoin from quantum computing threats while respecting the rights of dormant holders.