The proposed freeze on dormant bitcoin, valued at $78,741.14, could prompt an immediate and severe repricing, marking one of the most tumultuous trading days in the cryptocurrency's history since its inception in 2009, according to advocates. The debate surrounding the freeze centers on the potential risks posed by quantum computing, which could compromise the security of dormant tokens. Bitcoin developers and industry experts have been engaged in a heated discussion about whether to freeze these tokens to safeguard them against potential theft via quantum computing.
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 said.
Market analyst Jason Fernandes, a self-described pragmatic maximalist, concurred with Patt's assessment but believed that a successful quantum attack would have far more devastating 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 follows weeks of deliberation 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. Core Bitcoin developer Jameson Lopp advocated for freezing these tokens, worth roughly $440 billion, to prevent their potential theft by future quantum hackers.
Lopp and a team of developers released Bitcoin Improvement Proposal 361 (BIP-361), which proposes phasing out bitcoin's current cryptographic signatures and potentially freezing assets that fail to migrate. Patt warned that if this proposal were to proceed, '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 the intentions behind BIP-361 are good but that '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, rather than a protocol-level confiscation. 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 no central enforcement. However, not all maximalists agree, with some believing that Lopp's proposal is sensible and that the potential risks posed by quantum computing necessitate compromise.
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 to address this threat, just as it has in the past with upgrades like SegWit and Taproot. Ultimately, Fernandes thinks that the majority of bitcoin holders are more concerned with preserving capital than preserving a particular notion of what bitcoin should be.