New Bitcoin Proposal Offers Solution for Proving Ownership Without Revealing Identity

The concern over quantum computing has long been a challenge for Bitcoin, particularly for the millions of coins held in older wallets with exposed public keys, including those attributed to the cryptocurrency's creator, Satoshi Nakamoto. A recent proposal by prominent developer Jameson Lopp and others, known as BIP-361, suggests phasing out quantum-vulnerable addresses over a five-year period, which would require holders to move their coins to safer formats. However, this solution poses a dilemma for long-dormant holders like Satoshi, who would need to publicly reveal their identity to access their assets. To address this issue, Dan Robinson from Paradigm has introduced the concept of Provable Address-Control Timestamps, or PACTs. This approach enables holders to generate a proof of ownership without spending their coins, using a random salt and BIP-322 to produce a unique cryptographic commitment. The proof is then bundled with the salt and timestamped using OpenTimestamps, a service that anchors data onto the Bitcoin blockchain. If a soft fork is implemented to freeze quantum-vulnerable coins, the protocol could include a rescue path that accepts a zero-knowledge proof, allowing holders to spend their coins without revealing sensitive information. This solution also addresses a gap in BIP-361 by providing a rescue path for wallets derived through BIP-32. However, the implementation of PACTs would require significant infrastructure development, including the adoption of a STARK verification protocol. Ultimately, the success of PACTs depends on the cooperation of holders, including Satoshi, who must create the commitment to protect their assets.