BitMEX Unveils 'Canary Fund' as Middle Ground in Bitcoin Quantum Threat Debate

BitMEX Research has proposed a clever workaround to the controversial quantum coin freeze debate—and it's gaining traction as a less heavy-handed alternative to the polarizing BIP-361 proposal.

Rather than locking up quantum-vulnerable dormant bitcoins preemptively, BitMEX is pitching a "wait-and-see" approach: a soft fork that only triggers a full freeze if quantum computers actually prove they can steal BTC. "It may be appropriate to attempt to mitigate the extent of the freeze as much as possible, even at the cost of greater complexity," BitMEX stated in their Thursday proposal.

How the Canary Fund Actually Works

The mechanics are elegant. BitMEX proposes creating a special bitcoin address using a "Nothing-Up-My-Sleeve Number" (NUMS)—a cryptographic proof where the private key is provably unknown, but the address remains theoretically spendable by a sufficiently powerful quantum computer.

The community can donate BTC to this canary address as a bounty. The pitch to quantum-capable actors? Ring the alarm by spending from it, and prove the threat is real. Only when someone actually spends from this address does the freeze activate automatically. Until then, old coins remain spendable—no blanket restrictions.

The beauty of this mechanism is flexibility. BitMEX emphasized that participants in the canary fund can use multisignatures and withdraw their BTC at any time. There's also a safety window allowing quantum-vulnerable transactions to proceed even after the five-year mark proposed in BIP-361, though outputs would be locked for a period.

"While this approach adds complexity and risk, given how controversial any coin freeze is, mitigating the impact of the freeze using this type of system may be worth consideration," BitMEX wrote.

Why This Matters for the Bitcoin Community

The canary approach directly counters the backlash against BIP-361, which proposed proactively freezing dormant, quantum-vulnerable bitcoin holdings. That proposal drew fire from the community, with critics calling it "authoritarian" and "confiscatory"—serious accusations in a space built on self-custody and decentralization.

BIP-361 co-author Jameson Lopp acknowledged the controversy, describing his proposal as a "rough idea for a contingency plan" rather than something ready for activation. "I know folks don't like it. I don't like it myself. I wrote it because I like the alternative even less," he posted on X Wednesday.

Lopp told Cointelegraph the proposal addresses a "looming circulating supply shock" if quantum computing advances accelerate. But he's framing it as a rough sketch, not gospel.