Freezing idle bitcoins would trigger an immediate revaluation and mark one of the worst trading days for the world’s oldest cryptocurrency since its launch in 2009, advocates told CoinDesk.
Bitcoin developers and crypto industry participants have debated for weeks whether they should freeze dormant tokens to protect them against the risk of theft through quantum computing, whenever those machines start coming online.
“Freezing any coin, even the ‘lost’ ones, tells the market that the (approximately) 19.8 million BTC currently in circulation are conditionally owned,” said Samuel “Chad” Patt, who is also the founder of Op Net. “Institutional risk offices don’t care about the motive, they care about the precedent.”
Read more: A simple explanation of what quantum computing really is and why it’s scary for Bitcoin.
Although Jason Fernandes, a market analyst who describes himself as a pragmatic maximalist, said he agrees with Patt’s repricing thesis, he said he believes a successful quantum attack would trigger a much more severe repricing.
“Institutions will not only assess precedent, but will assess whether the system can survive a breakdown in its fundamental assumptions,” added Fernandes, also a co-founder of AdLunam.
Mati Greenspan, also a self-described maximalist and market analyst, said that if “quantum computers ever crack the first Bitcoin wallets, they won’t cause a rollback or a freeze; they will trigger the largest bug bounty in human history.”
The debate follows weeks of discussion over how to respond to the potential threat that quantum computing poses to the bitcoin network, particularly the estimated 5.6 million BTC. These tokens are held in wallets that have been dormant for over a decade, at addresses that have not been updated and are therefore the most vulnerable should quantum computing attacks become a reality.
A week ago, Jameson Lopp, a core Bitcoin developer and research analyst, told CoinDesk that he would rather see the dormant bitcoin, worth about $440 billion, frozen by the network than leave it at risk of being stolen by future quantum hackers. He said he already sees those bitcoins as lost.
Lopp and a team of other core bitcoin developers released the Bitcoin Improvement Proposal 361 (BIP-361) earlier this month. The proposal calls for phasing out bitcoin’s current cryptographic signatures, which could freeze assets that cannot migrate.
‘Instant’ price change
If that happened, Patt said, “bitcoin’s revaluation would be instantaneous, not gradual, and it would be the worst day in bitcoin history, but not because of a hack, but because the network will have proven that its core value proposition is tradable.”
The bitcoin maximalist said that all fund managers, “who allocated based on the censorship resistance thesis, would be forced to withdraw. Not by choice, but by mandate, because 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 in bitcoins threatened by quantum computing
Another bitcoin maximalist, Kent Halliburton, CEO and co-founder of SazMining, said he believes the intentions behind BIP-361 are good.
“However, it does not defend Bitcoin by breaking its central promise of inviolable property rights,” he said. “We operate data centers on four continents and our customers own all the machines. That 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 address the risks it poses, such as better tools and voluntary migration, “but not a protocol-level seizure disguised as a contingency plan.”
Deeply flawed
Khushboo Khullar, a partner at Lightning Ventures and also a bitcoin maximalist, said that freezing dormant coins is a deeply flawed approach, despite seeming like a pragmatic approach against quantum threats.
“It directly undermines Bitcoin’s core principles of immutability, lack of permissions, and lack of central enforcement. Such a move would require a controversial hard fork, violating the decentralized spirit of the network where no one can unilaterally confiscate or freeze anyone’s coins,” he said.
However, not all maximalists agree with Patt, Halliburton or Khullar and instead believe that Lopp’s proposal is sensible.
“It is extremely difficult to build systems that are truly future-proof, and while Bitcoin has come pretty close, quantum technology may pose a threat that requires trade-offs 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 compromise: freeze funds or let them be stolen? If resolved elegantly, this could be a critical moment for Bitcoin to demonstrate its resilience as a global monetary system,” he said.
Bitcoin could still evolve
Fernandes said he understands Patt and other maximalists’ points about precedent, adding that it is a real concern among the bitcoin community when discussing the network’s censorship-resistant ethos. In fact, he added, “I don’t think there is time; I think quantum technology will come much faster than anyone thinks.”
“However, framing this as a question of purity misses the most 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’s just conservative in how 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 within the community care about the long term, and that most bitcoin holders, whether maximalists or not, are “more interested in preserving capital than preserving some vague notion about what bitcoin is ‘supposed to be’.”
Greenspan echoes what many maximalists ultimately prefer. “As in many cases in life, and especially with bitcoin, doing nothing is better than doing something.”
He concluded: “The Bitcoin community seems to firmly believe that freezing coins would be antithetical to Bitcoin’s quintessential value proposition.”
Read more: How a quantum computer can be used to steal bitcoins in ‘9 minutes’
