Over 1.7 Million Bitcoin Could Be Lost Under New Quantum Proposal

TLDR

• Cardano founder Charles Hoskinson says Bitcoin’s proposed quantum defense, BIP-361, is being incorrectly labeled a soft fork when it would actually require a hard fork.
• BIP-361 proposes freezing quantum-vulnerable Bitcoin addresses and requiring users to migrate to post-quantum addresses.
• The zero-knowledge recovery system in BIP-361 cannot help owners of roughly 1.7 million Bitcoin created before 2013 seed phrase standards existed.
• Around 1.1 million of those coins are believed to belong to Satoshi Nakamoto and would be permanently frozen if the proposal passes.
• As of March 1, 2026, more than 34% of all Bitcoin in circulation has an exposed public key vulnerable to quantum computing attacks.

Cardano founder Charles Hoskinson has publicly criticized Bitcoin’s proposed quantum computing defense, saying it is technically mislabeled and cannot protect the network’s oldest coins.

The proposal in question is BIP-361, co-authored by Bitcoin developer Jameson Lopp and others. It aims to phase out Bitcoin addresses that are vulnerable to quantum computer attacks by freezing those funds and asking users to migrate to safer addresses.

Hoskinson made his comments in a livestream this week, pointing to data showing that as of March 1, 2026, more than 34% of all Bitcoin in circulation carries an exposed public key stored on-chain. That works out to roughly 8 million Bitcoin left open to attack from a sufficiently powerful quantum computer.

BIP-361 includes a zero-knowledge proof recovery system. This would allow holders of standard wallet seed phrases to prove ownership and reclaim any frozen funds after migration.

But Hoskinson argues the recovery system breaks down for approximately 1.7 million Bitcoin held in wallets that predate the BIP-39 seed phrase standard, which was not widely adopted until around 2013.

Those older wallets used a different key method from the original Bitcoin software. They relied on a local key pool rather than a recoverable seed phrase. Without a seed phrase, there is no way to construct the zero-knowledge proof needed to reclaim the coins.

The Hard Fork Debate

Beyond the recovery issue, Hoskinson challenged the way BIP-361 is classified. He said the proposal calls itself a soft fork but would functionally require a hard fork because it invalidates existing signature schemes still in active use.

Lopp, who co-authored the proposal, acknowledged on X this week that he does not like the plan himself and described it as “a rough idea for a contingency plan” rather than a finished specification.

Lopp has argued that freezing dormant coins — which he estimates at 5.6 million Bitcoin — would be preferable to a future quantum attacker recovering and selling them on the open market.

Governance and Institutional Pressure

Hoskinson also argued that Bitcoin’s lack of formal on-chain governance leaves it without a clean process for making this kind of decision. He pointed to Cardano, Polkadot, and Tezos as blockchains with formal governance systems that could handle such decisions through a community vote.

He suggested large institutional holders, including asset managers who have built up major Bitcoin positions in recent years, will eventually pressure Bitcoin developers to act regardless of community resistance.

If BIP-361 passes in its current form, the roughly 1.7 million pre-2013 coins would remain permanently frozen with no path to recovery.

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