The potential freezing of approximately 5.6 million dormant bitcoins, currently valued at $78,113 each, could lead to an immediate repricing and mark one of the cryptocurrency’s worst trading days since its inception in 2009, according to experts interviewed by CoinDesk.
For weeks, bitcoin developers and crypto industry stakeholders have debated whether freezing these tokens is necessary to protect them from potential theft via quantum computing, once such technology becomes operational. Samuel “Chad” Patt, founder of Op Net, emphasized that freezing any bitcoins, even those deemed lost, signals the market that all 19.8 million BTC in circulation are conditionally owned. He noted that institutional risk desks prioritize precedent over reasons behind it.
Jason Fernandes, a self-described pragmatic maximalist and co-founder at AdLunam, concurred with Patt regarding repricing but argued that a successful quantum attack could cause even more severe market consequences. “Institutions will consider the system’s ability to withstand core assumption breaches,” he stated.
Mati Greenspan, another self-proclaimed maximalist and market analyst, suggested that should quantum computers compromise early Bitcoin wallets, it would not lead to a rollback or freeze but rather result in an unprecedented bug bounty.
This debate follows ongoing discussions about the potential threats posed by quantum computing to bitcoins held in wallets inactive for over a decade. These wallets are particularly vulnerable as they haven’t been upgraded to withstand such attacks.
A week prior, Jameson Lopp, a core Bitcoin developer and research analyst, expressed a preference for freezing these dormant bitcoins, worth approximately $440 billion, rather than risking theft by future quantum hackers. He considers these bitcoins effectively lost already. Lopp and his team released the Bitcoin Improvement Proposal 361 (BIP-361) to phase out current cryptographic signatures, potentially freezing un-migrated assets.
Patt warned that if this proposal were implemented, bitcoin’s repricing would be immediate and dramatic, marking its worst single-day decline not due to hacking but because it reveals negotiability in the network’s core value proposition. He added that fund managers relying on bitcoin’s censorship-resistance may need to divest as mandated by these changes.
Kent Halliburton, CEO of SazMining, acknowledged BIP-361’s good intentions but warned against undermining Bitcoin’s promise of inviolable property rights. Khushboo Khullar from Lightning Ventures criticized the proposal for conflicting with bitcoin’s foundational principles like immutability and decentralization, suggesting it would require a contentious hard fork.
Yet, not all maximalists oppose Lopp’s plan. Ken Kruger, founder and CEO of Moon Technologies, argued that building truly future-proof systems is difficult, and quantum threats might necessitate uncomfortable trade-offs. He suggested that an elegant solution could demonstrate Bitcoin’s resilience as a global monetary system.
Fernandes acknowledged concerns about maintaining the network’s censorship-resistance ethos but insisted that quantum risk poses an existential threat rather than merely a philosophical debate. He believes bitcoin can adapt, as it has with past upgrades like SegWit and Taproot.
Ultimately, Fernandes suggested most in the community prioritize capital preservation over ideological purity. Greenspan echoed this sentiment, advocating for inaction as potentially more beneficial to Bitcoin’s core value proposition, emphasizing that freezing coins contradicts its fundamental ethos.