If the dormant bitcoin, currently valued at $78,531.01, were to be frozen, it could lead to an immediate and drastic repricing, marking one of the most turbulent trading days in the history of the cryptocurrency since its inception in 2009, according to advocates. The bitcoin community has been engaged in a heated debate over the past few weeks regarding the potential risks and consequences of freezing dormant tokens to safeguard them against the looming threat of quantum computing. Samuel 'Chad' Patt, founder of Op Net, cautioned that freezing any coins, including 'lost' ones, would send a signal to the market that all 19.8 million BTC in circulation are conditionally owned. 'Institutional risk desks do not care about the reason, they care about the precedent,' Patt emphasized.
Market analyst Jason Fernandes, who describes himself as a pragmatic maximalist, concurred with Patt's assessment but warned that a successful quantum attack would have far more severe repercussions. 'Institutions won’t just price precedent, they’ll price whether the system can survive a break in its core assumptions,' Fernandes added.
The debate revolves around the estimated 5.6 million BTC held in wallets that have been inactive for over a decade, rendering them vulnerable to potential quantum computing attacks. A week ago, core Bitcoin developer Jameson Lopp expressed his preference for freezing the dormant bitcoin, valued at approximately $440 billion, rather than leaving it exposed to the risk of theft by future quantum hackers. Lopp and a team of developers released Bitcoin Improvement Proposal 361 (BIP-361) earlier this month, which proposes phasing out bitcoin’s current cryptographic signatures and potentially freezing assets that fail to migrate.
If this proposal were to proceed, Patt predicted 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 argued that while the intentions behind BIP-361 are good, 'you don't defend Bitcoin by breaking its core promise of inviolable property rights.' Halliburton emphasized that the quantum computing threat is real but suggested that there are better ways to address the risks, 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 freezing dormant coins as a deeply flawed approach, despite its appearance as a pragmatic solution. 'It directly undermines Bitcoin’s core principles of immutability, permissionlessness, and no central enforcement,' Khullar said.
However, not all maximalists agree with Patt, Halliburton, or Khullar, with some believing that Lopp’s proposal is sensible. Ken Kruger, founder and CEO of Moon Technologies, noted that '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.' Fernandes acknowledged the concerns about precedent but emphasized that the quantum risk is an existential threat to the system, rather than a philosophical debate. 'The protocol isn’t ‘finished,’ it’s just conservative in how it changes,' Fernandes said. 'But the risk of inaction far outweighs any concern about precedent or philosophical purity.' Ultimately, Fernandes believes that the majority of bitcoin holders are more interested in preserving capital than preserving a vague notion about what bitcoin is 'supposed to be.' Mati Greenspan, a market analyst and maximalist, concluded that 'doing nothing is better than doing something' and that the Bitcoin community strongly feels that freezing coins would be antithetical to bitcoin's quintessential value proposition.