Bitcoins
- BIP-361 proposes freezing non-migrated Bitcoin to protect up to 34% of supply from future quantum threats.
- Hoskinson argues around 1.7 million BTC cannot be recovered due to pre-seed phrase wallet structures.
- Debate continues over whether the upgrade is truly a soft fork and how Bitcoin should handle major protocol changes.
Bitcoin developers are exploring a contingency plan to counter quantum computing threats through BIP-361, though the proposal has drawn criticism over its scope and execution. The upgrade is designed to gradually phase out vulnerable address types and require users to shift funds into more secure, quantum-resistant formats.
The initiative could safeguard over 7 million Bitcoin – around 34% of total supply – valued at US$536 billion (AU$745.04 billion), by freezing coins that fail to migrate within set deadlines. This process would unfold in stages, beginning with restrictions on new deposits and culminating in the immobilisation of legacy holdings.
Related: Trump-Linked Crypto Locks Investors Into Multi-Year Wait for Token Access
A Gap in Protection for Early Bitcoin
Cardano founder Charles Hoskinson has raised concerns that the proposal cannot fully protect older Bitcoin, particularly those created before modern wallet standards were introduced. He argues that roughly 1.7 million BTC, including about 1 million linked to early mining activity, cannot meet the requirements needed for recovery.
These coins were generated using earlier cryptographic methods that lack seed phrases, preventing them from producing the proofs required by the proposed recovery mechanism. As a result, Hoskinson contends they would remain permanently frozen if the upgrade were enacted in its current form.
He has further criticised the way BIP-361 is presented, stating that its impact would align more closely with a hard fork, a type of change historically resisted within Bitcoin’s development culture. The discussion underscores ongoing challenges in reaching consensus on how to address emerging technological risks.
Related: Tether Backs $134M Stablecoin Bet to Bring Crypto Into Everyday Use
Rachel Lourdesamy Read More