Charles Hoskinson, the founder of Cardano, has raised significant concerns regarding Bitcoin Improvement Proposal 361 (BIP-361), which aims to protect Bitcoin from potential quantum computing threats. In a recent YouTube video, Hoskinson argued that the proposal, presented as a soft fork, is fundamentally flawed and unable to safeguard approximately 1.7 million Bitcoin, including those attributed to Bitcoin’s creator, Satoshi Nakamoto.
The proposal, developed by Bitcoin core developers including Jameson Lopp, suggests freezing 8 million coins to prevent quantum attackers from accessing them. However, Hoskinson contends that the changes proposed would require a hard fork, which contradicts the Bitcoin community’s historical reluctance to implement such changes due to concerns over network immutability.
“To actually do this, you need a hard fork,” Hoskinson stated, emphasizing that the distinction between a soft fork and a hard fork is crucial. A soft fork allows older software to function while restricting access to new features, whereas a hard fork fundamentally alters the network’s rules, potentially leading to a split unless all users upgrade.
BIP-361 proposes that users with frozen funds could reclaim their assets through a zero-knowledge proof linked to their BIP-39 seed phrase. However, Hoskinson pointed out that this method would not work for coins mined before the introduction of BIP-39 in 2013, including around 1 million coins associated with Nakamoto’s early mining activities. These coins were created using a different method that does not involve a deterministic seed, making recovery impossible.
“There is no seed phrase to prove knowledge of, which means no zero-knowledge recovery scheme built on that assumption can return access to the holders. 1.7 million coins can’t do that. It’s not possible. 1.1 million of which belong to Satoshi,” Hoskinson explained.
If BIP-361 is enacted as currently proposed, these coins would remain inaccessible, as their original owners would lack the necessary cryptographic proof for migration.
Jameson Lopp, one of the proposal’s co-authors, acknowledged his reservations about the plan, describing it on X as a preliminary idea rather than a finalized solution. He expressed hope that the proposal would never need to be implemented, arguing that freezing dormant coins—estimated at 5.6 million Bitcoin—would be a better alternative than risking them falling into the hands of quantum attackers.
Hoskinson’s critique also touches on broader issues within the Bitcoin ecosystem, particularly the absence of formal on-chain governance. He believes this lack of structure complicates the decision-making process for significant upgrades, often leading to contentious negotiations among developers.
In related developments, a new zero-knowledge system has been introduced to facilitate shielded Bitcoin transactions, addressing the growing demand for privacy in the cryptocurrency space. This system, known as “Prism,” enables confidential transactions through vBTC and its VFX token, reflecting an industry-wide push to enhance privacy features in blockchain technology.
Charles Hoskinson critiques Bitcoin's BIP-361 proposal, asserting it cannot protect early mined coins from quantum threats. He emphasizes the need for a hard fork, challenging the proposal's characterization as a soft fork and highlighting governance issues within the Bitcoin network.