Bitcoin Quantum Theft Freeze Proposal Draws Alternatives

A controversial proposal to freeze older, dormant bitcoins to prevent them from being stolen by quantum computing attacks is generating a great deal of pushback, with several prominent sources suggesting alternatives.

About 1.7 billion dormant bitcoins are locked using old encryption protocols that make them exceptionally vulnerable to theft by quantum computers, which will be powerful enough to break bitcoin’s encryption by brute force. Beyond that, 34% of the total bitcoin supply has an exposed public key that will be vulnerable to quantum threats unless transferred to new wallet addresses.

A proposal yesterday by prominent bitcoin developers, including Jameson Lopp, suggested a three-stage freeze of older bitcoins over five years, which would require seed phrases and zero-knowledge proofs to unfreeze.

Blockstream CEO Adam Back — who a recent New York Times article said was Bitcoin creator Satoshi Nakamoto — has argued that the quantum threat is at least a decade away. Nonetheless, he came out with an alternative to the freeze, saying in a speech at Paris Blockchain Week that optional quantum-resistant improvements are the way to go, CoinDesk reported.

BitMEX Research, an arm of the well-known exchange, directly addressed the Lopp proposal by suggesting a canary-in-a-coal-mine approach, in which a special fund of quantum vulnerable coins is set up specifically to bait quantum attackers.

Draining bitcoins from that wallet would “immediately trigger a full quantum freeze,” BitMEX Research said in an X post. “We argue that we should attempt to avoid a complete freeze altogether, unless it is proven that a quantum computer has actually arrived.”

A potential flaw in this scheme, BitMEX research admitted, is that the fund may be too small to attract quantum thieves. Another is that quantum thieves would simply avoid the fund to enable them to pick off multiple, larger bitcoin caches.

One answer to that, the researchers said, is that a reputable quantum computing lab is likely to be the first entity capable of breaking Bitcoin encryption, and would be incentivized to attack the quantum canary, both to prove it can be done and to gain the bitcoin funds.

“This approach is more arbitrary and complex than a more simple coin freeze,” BitMEX Research admitted. “However, in our view, given the significant cost and disruption a freeze could cause, it is probably worth considering and evaluating the potential mitigation options available, in order to minimize the probability that anyone loses their coins.”