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Satoshi Nakamoto’s Bitcoin holdings risk getting stolen as the quantum threat becomes more of a possibility. BTC developer Hunter Beast has notably proposed the Hourglass V2 proposal amid debates on the best way to handle Satoshi’s supply, to mitigate the impact of sell pressure that Bitcoin could face if these coins get stolen.
BTC Dev Provides Solution On How To Handle Satoshi Nakamoto’s Bitcoin Holdings
Beast has proposed version 2 of the Hourglass proposal, which aims to reduce the Pay-to-Public-Key (P2PK) output that can be included in transaction inputs to 1 BTC per block. It is worth noting that Satoshi Nakamoto’s Bitcoin stash of around 1.1 million BTC is a P2PK address, which exposes the public key and makes it more vulnerable to quantum attacks.
A Chainalysis report revealed that approximately $718 billion in Bitcoin is held in addressesvulnerable to quantum attacks, including these P2PK addresses. As such, Bitcoin could face an unprecedented supply shock if these coins get stolen by quantum attackers.
Beast’s Hourglass proposal aims to minimize selling pressure to the barest minimum while also offering a compromise on whether to freeze or burn Satoshi Nakamoto’s coins to prevent them from falling into the wrong hands. The Hourglass v2 proposal also noted that burning or freezing these coins may be viewed as confiscatory, which could set a dangerous precedent for changing Bitcoin’s monetary policy going forward.
If activated, the Hourglass V2 proposal will ensure that only one P2PK output may be included as a transaction input per block. Furthermore, no P2PK outputs to any address not currently being spent from can be created. Lastly, no P2PK outputs can be created from other output types.
Meanwhile, it is worth noting that this proposal applies only to P2PK addresses, and other outputs that are vulnerable to quantum threats remain at risk. This is because putting similar restrictions on other output types may limit the transition to quantum-resistant Bitcoin addresses. These other output types are still commonly used, unlike Satoshi Nakamoto’s P2PK address, which makes the latter easy to sunset.
Rationale For The Proposal
The Hourglass V2 proposal will limit P2PK output to approximately 144 BTC per day. Beast noted that this should effectively mitigate the market impacts of quantum attacks on P2PK coins since these quantum attackers won’t be able to dump all the Bitcoin at once.
Without such restrictions, over 6,000 P2PK transactions could be executed in each block, releasing over 300,000 BTC per block to the market. At such a rate, all P2PK coins, including Satoshi Nakamoto’s, could be spent in just a few hours.
However, under the rules of the Hourglass V2, it would take more than 32 years to move all P2PK coins, which drastically reduces quantum-related market risks. A positive is that original keyholders, such as Satoshi Nakamoto, should remain able to move their coins even after the proposal is activated, as long as no quantum actors are currently competing for P2PK transactions.
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