Bitcoin’s $440 Billion Time Bomb: The Proposal That Could Freeze 5.6 Million Dormant Coins 

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A Bitcoin Improvement Proposal put forward by Casa CTO Jameson Lopp on April 15 could freeze an estimated 5.6 million long-dormant coins worth roughly $440 billion at current prices. If adopted, this move would force holders to migrate to quantum-resistant wallets or permanently lose the ability to move those coins. Critics warn the move could trigger a major market sell-off, with analysts warning of severe market consequences, and fundamentally alter Bitcoin’s unconditional ownership model.

BIP-361 and the Quantum Threat Driving It

The proposal, known as BIP-361, was released on April 15 by Jameson Lopp, CTO of Casa and a longtime Bitcoin developer. The initiative proposes replacing Bitcoin’s existing ECDSA signature scheme with quantum-resistant alternatives and potentially freezing any assets whose holders fail to migrate. 

According to Lopp’s estimate, the roughly 5.6 million BTC targeted are held in wallets dormant for more than a decade, in addresses whose public keys are exposed on-chain. One type is Pay-to-Public-Key outputs, where the public key is always visible on-chain. The other is Pay-to-Public-Key-Hash addresses, an early wallet format where the public key was exposed when the wallet was first used to send funds. 

Security researchers consider both types more vulnerable to quantum attacks, given that their public keys are already exposed on-chain. Lopp stated on April 15 that he would prefer to see those coins frozen by the network rather than left vulnerable to quantum computers capable of breaking current encryption, adding that he already regards them as lost.

Critics Warn Freeze Would Undermine Ownership Guarantees

Several prominent voices in the industry have pushed back on the proposal, with critics focusing largely on the precedent it would set for Bitcoin’s foundational promise of censorship-resistant, unconditional ownership. Samuel Patt, founder of Op Net, argued that any freeze would fundamentally alter how institutional investors assess the entire circulating supply. 

“Freezing any coins, even ‘lost’ ones, tells the market that all roughly 19.8 million BTC currently in circulation are conditionally owned. Institutional risk desks do not care about the reason, they care about the precedent.” 

Patt predicted the market response would be immediate rather than gradual, adding that it would be the worst single day in bitcoin’s history – not because of a hack, but because the network will have proven its core value proposition is negotiable.

According to Patt, fund managers who allocated capital on the censorship-resistance thesis would be forced to unwind. Not by choice, but by mandate, because the asset no longer fits the risk profile it was purchased under.

Industry Voices Reject Protocol-Level Freeze

Kent Halliburton, CEO and co-founder of SazMining, acknowledged that the intentions behind BIP-361 are good but rejected its approach, stating: 

“You don’t defend Bitcoin by breaking its core promise of inviolable property rights. We operate data centers on four continents, and our clients own every machine. That model only works because Bitcoin guarantees unconditional ownership.” 

Halliburton said he believes the quantum threat is real but that voluntary migration and better tooling are preferable to what he called “a protocol-level confiscation dressed up as a contingency plan.” 

Khushboo Khullar, venture partner at Lightning Ventures, described the freezing approach as deeply flawed, even as a contingency against a real threat. In a statement, she emphasized that it directly undermines Bitcoin’s core principles of immutability, permissionlessness, and no central enforcement. She added that such a move would require a contentious hard fork, violating the network’s decentralized ethos where no one can unilaterally seize or freeze anyone’s coins.

Quantum Attack Would Cause More Damage Than a Freeze, Analyst Argues

Market analyst Jason Fernandes, co-founder at AdLunam, said he agrees with Patt’s repricing thesis but argued that the consequences of a successful quantum attack would be far more severe than those of a freeze.

“Institutions won’t just price precedent, they’ll price whether the system can survive a break in its core assumptions. Quantum risk is an existential threat to the system, not a philosophical debate,” 

He pointed to past protocol upgrades such as SegWit and Taproot, upgrades that also required network-wide adoption but preserved Bitcoin’s core rules, as evidence that Bitcoin can evolve without losing its integrity.

He added that the protocol isn’t ‘finished’; it’s just conservative in how it changes. But the risk of inaction far outweighs any concern about precedent or philosophical purity. Fernandes also argued that most Bitcoin holders prioritize capital preservation over ideological purity, a view not supported by data and contested by others in the space.

Some Voices Prefer Restraint Over Protocol Intervention

Ken Kruger, founder and CEO of Moon Technologies, acknowledged that quantum computing may force uncomfortable choices, stating that so far there’s no solution that doesn’t include compromise: freeze funds or let them be stolen? According to him, if solved elegantly, this could be a critical moment Bitcoin proves its resilience as a global monetary system.

Some in the Bitcoin community see restraint, not intervention, as the right response to the quantum threat. Mati Greenspan, a market analyst and self-described maximalist, said that if quantum computers ever succeed in cracking early Bitcoin wallets, the outcome “won’t trigger a rollback or a freeze; it will trigger the largest bug bounty in human history.” 

Greenspan ultimately sided with inaction. “As with many cases in life, and especially with bitcoin, doing nothing is better than doing something,” he said, adding that the broader community “seems to feel strongly that freezing coins would be antithetical to bitcoin’s quintessential value proposition.”

BIP-361 is now under community review with no consensus reached.