Burning quantum-vulnerable coins is a bad idea

The debate over burning quantum-vulnerable Bitcoin has simmered for years, but it’s now gaining traction among influential Bitcoin community members (Peter Wuille, Jameson Lopp, @calle/@niftynei). Their push or acceptance for a hardfork to destroy these coins, often cloaked in good intentions, threatens the core of Bitcoin’s promise: property rights for anyone, independent of institutional control.

Bitcoin exists to secure property rights without reliance on governments. Its fixed supply prevents value theft through inflation, and its design ensures coins can’t be seized or reassigned by fiat. The whole point is that no one can steal from you. All other benefits—easier economic calculation, lower time preference—stem from this foundation.

Many may consider this quite ironic given that the threat of quantum computers is exactly that: theft. But this is the point everyone gets wrong. There is in fact no appreciable threat of theft from quantum computers. The threat of theft stems only from well-meaning interventionalists.

A hardfork is state-like intervention in the Bitcoin network, imposing the majority’s will on a minority. It’s only justified in existential crises, 

like a direct threat to the network’s survival. Quantum computing isn’t that threat. Practical quantum computers capable of breaking ECDSA are at least a decade away, giving us ample time to soft-fork quantum-resistant address formats and voluntarily move coins to safer addresses. In fact, owners of vulnerable P2PK addresses can already transfer funds to secure formats like P2PKH—unless of course, they don’t actually own the coins.

There is not a single person who will not have ample time and opportunity to move their coins to non-vulnerable addresses. Any and all coins remaining in quantum vulnerable addresses at the advent of quantum computers should be considered either as donations to those developing such machines, or ownerless. If something is ownerless it is fair game to anyone who can claim ownership over it.

The argument for burning coins hinges on fear: roughly 1.7 million P2PK coins, often labeled “lost,” could be vulnerable. But “lost” doesn’t necessarily mean unowned. We simply don’t know if anyone owns them. In fact, it hasn’t even been more than a few weeks since 80,000 btc that has featured on several lists of “lost” coins were moved for the first time in 14 years. 

Some claim 25% of Bitcoin’s supply is at risk, but this adds coins being currently used in unsafe ways, such as exchanges reusing addresses—a practice unlikely to persist in a quantum era. If owners of vulnerable coins choose not to move them, that’s their right. I find the very idea of burning coins that are not your own squarely contradictory to Bitcoin’s ethos.

I also cannot find any evidence to support the argument that these coins represent some threat to market stability. Below, I have listed all coins in P2PK addresses and grouped them by size band. There are only about 10,200 BTC in addresses that could cause any market disruption. Given how small these balances are, this disruption would be both minor and temporary. A single middle-sized bitcoin treasury being liquidated would have a bigger impact. Moreover, the effect of the coins in any of these addresses coming to market at any given time is not distinguishable from current whale behavior. 

Almost all vulnerable coins are coinbase transactions that have never moved. Out of the 34,287 addresses in the 10 - 100 BTC band, 34,068 have balances between 49 and 51 BTC. Under no technological scenario I have ever heard suggested do all these addresses suddenly become reversible in an instance. Reversing an address will take time and it will cost money. Reversing an address with 3,233 BTC in it will take as long as reversing one with 50 BTC.

In effect this means that the proper treasure hunt only really involves 24 addresses. The rest will be worth relatively little, and may not be worth the time and effort at varying stages of technological development. This also presents us with an opportunity I consider beneficial enough that it warrants consideration on its own:

If no coins are left in P2PK addresses, we will have no hard evidence of the progression of quantum computing power towards the actually scary scenario for Bitcoin as it’s currently structured; the point where private keys can be calculated from signatures in less than 10 minutes. If we leave the P2PK coins as they are, the Patoshi stack alone will literally act as a countdown clock informing us of the progression of practical quantum computers. This will give us a dependable way of calculating the time-risk of using Taproot addresses. Increasing tick speed will also act as a strong incentive for UTXO owners to move their coins to secure address formats.

Consider these points:

• Quantum computers can’t create new bitcoin; the 21-million cap holds

• A quantum miner selling recovered coins is no different from a whale dumping theirs—market impacts are manageable

• It will take the same time and effort to reverse any two addresses and we have no idea what the costs will be—that might make many P2PK addresses unprofitable to recover, perhaps forever

• Vulnerable coins won’t flood the market at once; some large addresses might come in early since they are the most attractive to reverse, but overall they’d trickle in slowly as most are 50-coin coinbase UTXOs

• Burning coins is like banning treasure hunting to prevent “wealth redistribution.” It’s absurd and undermines bitcoin’s credibility as neutral and non-sovereign

One of the most important tenants of Bitcoin is that it has a fixed supply. Altering the supply critically undermines the assurances users have in bitcoin as sound money. Burning coins alters the supply. Another one is that Bitcoin offers the right to self custody. Burning coins violates the right to self custody. The whole thing is absurd: some people are so concerned with avoiding theft that they want to commit theft.

Forcing a hardfork to burn coins not only destroys the idea that bitcoin supply is fixed, it violates Bitcoin’s promise of neutral property rights. If we override owners’ rights once, we open the door to future interventions. Bitcoin’s claim to sovereignty would crumble, replaced by rule-by-fiat. That is the way Ethereum operates, not Bitcoin. It’s one of the lamest possible ways to ruin one of the greatest technologies ever.