Hoskinson Rejects BIP-361 Claims: Zero-Knowledge Recovery

Charles Hoskinson, founder of Cardano, has rejected BIP-361 claims, stating that zero-knowledge recovery cannot unlock 1.7M pre-2013 BTC. Hoskinson rejects BIP-361 claims due to its inability to protect a significant portion of the Bitcoin supply.

Understanding BIP-361 and Its Limitations

BIP-361, presented by Jameson Lopp, aims to phase out ECDSA and Schnorr signatures, considered vulnerable to quantum computers. The proposal is divided into three phases: Phase A blocks new sends to vulnerable addresses, Phase B causes nodes to reject transactions based on those signature schemes, and Phase C contemplates a recovery mechanism through zero-knowledge proofs tied to BIP-39 seed phrases.

Technical Flaws and Incompatibilities

Hoskinson pointed out that the proposal contains a structural flaw, rendering it ineffective at protecting approximately 1.7 million BTC stored in addresses predating 2013. These wallets predate the technical standards on which the current system is built, making them incompatible with the proposed recovery mechanism.

Zero-Knowledge Proofs and BIP-39 Seed Phrases

The BIP-361 proposal relies on zero-knowledge proofs tied to BIP-39 seed phrases. However, wallets from the Satoshi Nakamoto era were created with an architecture that does not include BIP-39 seed phrases or hierarchical deterministic key generation, leaving them outside the proposed recovery scheme. 1.1 million of these coins are attributed to Satoshi Nakamoto.

Classification and Activation

Hoskinson questions the classification of the proposal as a soft fork, arguing that it would require a hard fork. The BIP-361 text itself notes that activating Phase C independently would likely require a relaxation of the consensus rules.

Key Takeaways

• Hoskinson rejects BIP-361 claims due to its inability to protect 1.7M pre-2013 BTC.
• The proposal relies on zero-knowledge proofs tied to BIP-39 seed phrases, which are incompatible with older wallets.
• The plan may require a hard fork, rather than a soft fork, to activate Phase C.
• Approximately 1.1 million coins attributed to Satoshi Nakamoto are affected by this limitation.

Frequently Asked Questions

What is the main issue with BIP-361?

The proposal's recovery mechanism is incompatible with wallets created before 2013, leaving a significant portion of the Bitcoin supply unprotected.

What is the alternative to BIP-361?

Leaving quantum vulnerabilities unaddressed is considered less acceptable than the proposed solution, despite its limitations.