Cardano founder Charles Hoskinson has issued a stark warning to the Bitcoin community, arguing that the proposed quantum-resistance upgrade BIP 361 is not a soft fork as claimed but a hard fork in disguise—and one that could result in the permanent confiscation or loss of approximately 1.7 million Bitcoin, including the estimated 1.1 million BTC believed to belong to Satoshi Nakamoto.
Quantum Threat: Over 34% of Bitcoin Supply Exposed
During a live stream this week, Hoskinson cited data showing that as of March 1, 2026, more than 34% of all circulating Bitcoin (roughly 8 million BTC) have their public keys visible on-chain, making them vulnerable to a sufficiently powerful quantum computer. “Your supply is 34% vulnerable,” he said. “And unfortunately, you’re going to have to deal with it. I think Satoshi is going to be the loser.”
BIP 361: Mislabeling a Hard Fork as a Soft Fork
BIP 361, authored by Bitcoin developers Jameson Lopp, Christian Papathanasiou, Ian Smith, Joe Ross, Steve Vaile, and Pierre-Luc Dallaire-Demers, proposes freezing exposed funds and forcing users to migrate to post-quantum addresses. It includes a zero-knowledge (ZK) proof recovery mechanism that would supposedly allow holders of HD wallet seed phrases to reclaim their frozen coins.
Hoskinson’s core objection is that the proposal self-identifies as a soft fork when, in his analysis, the required mechanism amounts to a hard fork—something Bitcoin has never implemented. “To actually do this, you need a hard fork,” he said. “But don’t take my word for it. I’m just a ‘sh**coiner.’ You’ll see it for yourselves later.”
1.7 Million BTC Unrecoverable: Satoshi’s Stash Included
Hoskinson further explained that the ZK-based recovery system only works for wallets that adopted BIP 32 and BIP 39 standards, which were not widely used until 2013. Coins stored in earlier wallets—approximately 1.7 million BTC, including the roughly 1.1 million BTC attributed to Satoshi Nakamoto—cannot be recovered via any ZK-based system tied to a seed phrase.
“I can’t construct a zero-knowledge proof for such a system,” he stated. “I make my living building these systems. Those 1.7 million coins—wow. They will all be stolen and dumped on the market. If you had on-chain governance, you could solve this. Cardano has that.”
Bitcoin’s Lack of On-Chain Governance
Hoskinson pointed to Bitcoin’s absence of formal on-chain governance as a structural barrier to a clean solution. He contrasted it with Cardano, Polkadot, and Tezos, all of which have built-in mechanisms for protocol-level decisions via community voting. Without such governance and a willingness to hard fork, he argued that Bitcoin would face two grim options in the 2030s: either allow a quantum-capable attacker to drain vulnerable addresses and dump a huge portion of the total supply onto the open market, or force a hard fork that permanently locks away 1.7 million BTC.
Institutional Forces May Force the Issue
Hoskinson also highlighted the growing role of institutions such as BlackRock and Strategy, which have amassed significant Bitcoin positions, and the U.S. government, which reportedly holds a strategic reserve. He suggested these entities will eventually push Bitcoin developers to act regardless of ideological resistance from the community. “They own you now,” he said. “They will force you to do this, and they will steal all of Satoshi’s coins. Your alternative is to do nothing—and let pirates take the gold, and suffer 30% of the supply being dumped on the open market.”
While acknowledging he holds no authority in the Bitcoin ecosystem, Hoskinson positioned himself as a longtime observer who has been warning about this scenario for over a decade. He noted that Cardano, Ethereum, and Solana are all working on post-quantum solutions on their own timelines, with on-chain governance providing an official avenue for collective decisions.
He concluded with a direct appeal to Bitcoin developers: “If you’re going to hard fork, do it right. Use it as an opportunity to modernize the protocol and bring in new technical leadership that can implement the changes.”