Key Takeaways
- Charles Hoskinson, founder of Cardano, claims Bitcoin’s BIP-361 quantum defense proposal represents a hard fork disguised as a soft fork.
- The proposal seeks to freeze Bitcoin addresses vulnerable to quantum attacks and mandate migration to quantum-resistant addresses.
- Approximately 1.7 million Bitcoin stored in pre-2013 wallets cannot benefit from BIP-361’s zero-knowledge recovery mechanism due to outdated key management systems.
- An estimated 1.1 million of these inaccessible coins belong to Bitcoin creator Satoshi Nakamoto and would face permanent freezing under the proposal.
- Data reveals that over 34% of circulating Bitcoin as of March 1, 2026, contains exposed public keys susceptible to quantum computing threats.
Charles Hoskinson, the founder of Cardano, has voiced strong criticism regarding Bitcoin’s proposed quantum computing protection measure, claiming the initiative is incorrectly classified and fails to safeguard the network’s earliest coins.
The controversial proposal, known as BIP-361, comes from Bitcoin developer Jameson Lopp and additional co-authors. The plan seeks to retire Bitcoin addresses exposed to quantum computer threats by freezing associated funds and requiring holders to transfer assets to quantum-secure addresses.
During a livestream presentation this week, Hoskinson referenced data indicating that more than 34% of all Bitcoin currently in circulation displays an exposed public key recorded on the blockchain as of March 1, 2026. This represents approximately 8 million Bitcoin vulnerable to exploitation by advanced quantum computing systems.
The BIP-361 framework incorporates a zero-knowledge proof recovery mechanism. This feature would enable holders possessing standard wallet seed phrases to demonstrate ownership and recover frozen funds following address migration.
Hoskinson contends the recovery system fails for approximately 1.7 million Bitcoin held in wallets created before the BIP-39 seed phrase standard gained widespread adoption around 2013.
These early-generation wallets operated using a distinct key generation method from Bitcoin’s original client software. They depended on a local key pool structure instead of a recoverable seed phrase. The absence of a seed phrase eliminates any possibility of generating the zero-knowledge proof required to unlock these coins.
“1.7 million coins can’t do that. It’s not possible. 1.1 million of which belong to Satoshi,” Hoskinson said.
The Hard Fork Debate
Beyond concerns about recovery mechanisms, Hoskinson questioned the technical classification of BIP-361. He asserts the proposal presents itself as a soft fork while functionally demanding a hard fork because it invalidates signature schemes currently in active operation.
“To actually do this, you need a hard fork,” Hoskinson said. Bitcoin has never executed a hard fork, and its development culture has historically opposed doing so.
Lopp, who contributed to authoring the proposal, admitted on X this week that he personally dislikes the plan and characterized it as “a rough idea for a contingency plan” instead of a complete specification.
Lopp has maintained that freezing dormant coins — which he calculates at 5.6 million Bitcoin — would be more favorable than allowing a future quantum attacker to recover and liquidate them through market sales.
Governance and Institutional Pressure
Hoskinson additionally argued that Bitcoin’s absence of formal on-chain governance removes any clear mechanism for resolving this type of critical decision. He referenced Cardano, Polkadot, and Tezos as blockchain networks equipped with formalized governance frameworks capable of managing such decisions through community voting processes.
He predicted that large institutional stakeholders, including asset management firms that have accumulated substantial Bitcoin positions in recent years, will ultimately apply pressure on Bitcoin developers to implement changes despite community opposition.
Should BIP-361 receive approval in its present configuration, the approximately 1.7 million pre-2013 coins would become permanently frozen without any available recovery option.
