If 5.6 million dormant bitcoin were to be frozen, it could instantly reprice the market and potentially mark the cryptocurrency's worst trading day since its inception in 2009, according to advocates. The debate surrounding the freezing of dormant tokens to protect against quantum computing threats has been ongoing among bitcoin developers and industry participants.
Samuel 'Chad' Patt, founder of Op Net, stated that freezing any coins, including 'lost' ones, sets a precedent that all 19.8 million BTC in circulation are conditionally owned, which could lead institutional risk desks to reevaluate their investments. Market analyst Jason Fernandes agrees with Patt's repricing thesis but believes a successful quantum attack would trigger a more severe repricing.
Fernandes notes that institutions will not only price the precedent but also whether the system can survive a break in its core assumptions. Mati Greenspan, a self-described maximalist, said that if quantum computers were to crack early Bitcoin wallets, it would trigger the largest bug bounty in human history rather than a rollback or freeze.
The discussion follows weeks of debate over how to respond to the potential threat quantum computing poses to the bitcoin network, particularly the estimated 5.6 million BTC held in dormant wallets. Jameson Lopp, a core Bitcoin developer, prefers to see the dormant bitcoin frozen by the network rather than left vulnerable to future quantum hackers. Lopp and other developers released Bitcoin Improvement Proposal 361, which contemplates phasing out bitcoin's current cryptographic signatures and potentially freezing assets that fail to migrate. Patt warned that if this were to proceed, bitcoin's repricing would be instant and potentially the worst single day in its history.
Bitcoin maximalist Kent Halliburton believes the intentions behind BIP-361 are good but argues that defending Bitcoin by breaking its core promise of inviolable property rights is not the solution. Khushboo Khullar, a venture partner at Lightning Ventures, said that freezing dormant coins is a deeply flawed approach that undermines Bitcoin's core principles of immutability, permissionlessness, and no central enforcement. However, not all maximalists agree, and some believe Lopp's proposal is sensible.
Ken Kruger, founder and CEO of Moon Technologies, noted that building systems that are truly future-proof is challenging, and while Bitcoin has come close, quantum may pose a threat that requires tradeoffs. Fernandes understands the concerns about precedent but believes that the risk of inaction far outweighs any concern about philosophical purity.
Ultimately, Fernandes believes that most bitcoin holders are more interested in preserving capital than preserving a notion about what bitcoin is 'supposed to be.' Mati Greenspan concluded that doing nothing is often better than doing something, and the Bitcoin community seems to strongly feel that freezing coins would be antithetical to bitcoin's quintessential value proposition.