Freeze dormant bitcoin would trigger an immediate price review and mark one of the cryptocurrency’s worst trading days globally since its launch in 2009, advocates told CoinDesk.
Bitcoin developers and crypto industry players have been debating for weeks whether they should freeze dormant tokens to protect them from the risk of theft via quantum computing, whenever such machines begin to come online.
“Freezing all coins, even the ‘lost’ ones, signals to the market that the (approximately) 19.8 million BTC currently in circulation are conditionally held,” said Samuel “Chad” Patt, who is also the founder of Op Net. “Institutional risk management offices don’t care about reason, they care about precedent. »
Read more: A simple explanation of what quantum computing really is and why it’s terrifying for Bitcoin
Although Jason Fernandes, a market analyst who describes himself as a pragmatic maximalist, said he agreed with Patt’s repricing thesis, he said he believed a successful quantum attack would trigger a much more severe repricing.
“Institutions will not just assess precedent, they will assess the system’s ability to survive a breakdown in its basic assumptions,” added Fernandes, also co-founder of AdLunam.
Mati Greenspan, also a self-described maximalist and market analyst, said that if “quantum computers hack the first Bitcoin wallets, it won’t trigger a rollback or freeze; it will trigger the largest bug bounty in human history.”
The debate follows weeks of discussions about how to address the potential threat quantum computing poses to the Bitcoin network, particularly the estimated 5.6 million BTC. These tokens have been kept in dormant wallets for over a decade, in addresses that have not been upgraded and are therefore most vulnerable in case quantum computing attacks become a reality.
A week ago, Bitcoin developer and principal research analyst Jameson Lopp told CoinDesk that he would rather see dormant bitcoin, worth around $440 billion, frozen by the network than risk being stolen by future quantum hackers. He said he already considered these bitcoins lost.
Lopp and a team of other core Bitcoin developers released Bitcoin Improvement Proposal 361 (BIP-361) earlier this month. The proposal envisions phasing out Bitcoin’s current cryptographic signatures, which could freeze assets that fail to migrate.
“Instant” repricing
If this were to continue, Patt said, “Bitcoin’s price overhaul would be instantaneous, not incremental, and would be the worst day in Bitcoin history, but not because of a hack, but because the network will have proven that its fundamental value proposition is tradable.”
The Bitcoin maximalist said that all fund managers, “who allocated on the thesis of censorship resistance, would be forced to withdraw. Not by choice, but by mandate, as the asset no longer fits the risk profile under which it was purchased.”
Read more: To freeze or not to freeze: Satoshi and the $440 billion bitcoin under threat from quantum computing
Another bitcoin maximalist, Kent Halliburton, CEO and co-founder of SazMining, said he believes the intentions behind BIP-361 are good.
“However, you do not defend Bitcoin by breaking its fundamental promise of inviolable property rights,” he said. “We operate data centers on four continents and our customers own every machine. This model only works because Bitcoin guarantees unconditional ownership.”
Halliburton said he believes, like many others, that the threat of quantum computing is real, but that there are better ways to manage the risks it poses, such as better tools and voluntary migration, “but not protocol-level confiscation disguised as a contingency plan.”
Deeply flawed
Khushboo Khullar, a venture partner at Lightning Ventures and also a bitcoin maximalist, said freezing dormant coins is a deeply flawed approach, although it appears to be a pragmatic approach against quantum threats.
“This directly undermines Bitcoin’s core principles of immutability, permissionlessness, and lack of central enforcement. Such a move would require a controversial hard fork, violating the network’s decentralized ethos that no one can unilaterally seize or freeze anyone’s coins,” she said.
However, not all maximalists agree with Patt, Halliburton, or Khullar and instead believe Lopp’s proposal is sensible.
“It is extremely difficult to build truly scalable systems, and even if Bitcoin has come close, quantum may pose a threat that requires tradeoffs that participants will not be happy with.” said Ken Kruger, founder and CEO of Moon Technologies.
“So far, there is no solution that does not include a trade-off: freeze funds or let them be stolen? If resolved elegantly, this could be a critical moment where Bitcoin proves its resilience as a global monetary system,” he said.
Bitcoin could still evolve
Fernandes said he understood Patt and other maximalists’ arguments about precedent, adding that it was a real concern within the Bitcoin community when it came to the network’s censorship-resistant ethics. In fact, he added, “I don’t think we have time; I think quantum will happen much faster than anyone thinks.”
“However, framing this as a purity issue misses the more important issue: quantum risk is an existential threat to the system, not a philosophical debate,” Fernandes said. He believes Bitcoin could evolve as it has in the past with SegWit and Taproot, upgrades designed to improve network efficiency, privacy and scalability.
“The protocol is not ‘finished,’ it is just conservative in the way it changes,” he said. “But the risk of inaction far outweighs any concerns about precedent or philosophical purity.”
Ultimately, Fernandes believes that very few people in the community care in the long term and that the majority of Bitcoin holders, whether maximalists or not, are “more interested in preserving capital than in preserving a vague idea of what Bitcoin is supposed to be.”
Greenspan echoes what many maximalists ultimately prefer. “As with many things in life, and especially with Bitcoin, doing nothing is better than doing something.”
He concluded: “The Bitcoin community seems firmly convinced that freezing coins would be contrary to Bitcoin’s quintessential value proposition. »
Read more: How a quantum computer can be used to steal your bitcoin in ‘9 minutes’
