What is BitMEX’s “canary fund” proposal for Bitcoin?

BitMEX Research proposed a “canary fund” to detect real quantum threats to Bitcoin. The idea is to create a special wallet that acts as a test target for quantum attackers. If it gets hacked, it proves the threat is real.

How does the canary fund system actually work?

The system uses a special Bitcoin address with no known private key, where users can send BTC as a bounty. If a quantum computer can break Bitcoin cryptography, it could spend those funds. That action would act as a signal to trigger protective measures.

When would Bitcoin coins actually be frozen under this proposal?

Coins would only be frozen if a quantum computer proves its capability by spending from the canary address. This creates a “wait-and-see” model instead of acting pre-emptively. Until then, normal Bitcoin transactions would continue.

What problem is BitMEX trying to solve with this proposal?

The proposal addresses the long-term risk that quantum computers could break Bitcoin’s cryptography and steal funds. Instead of reacting too early, BitMEX wants proof before taking drastic action. This reduces unnecessary disruption to the network.

How is this different from the BIP-361 proposal?

BIP-361 suggests freezing dormant, quantum-vulnerable Bitcoin in advance. BitMEX’s approach delays any freeze until there is real evidence of a quantum attack. This makes it less aggressive but potentially riskier if threats emerge quickly.

Why has BIP-361 been controversial in the Bitcoin community?

Some critics argue that freezing coins is “confiscatory” and goes against Bitcoin’s decentralised principles. It could affect long-held or lost coins without owner consent. This has led to pushback from parts of the community.

What are the risks of the canary fund approach?

The main risk is waiting too long to act if quantum attacks become possible suddenly. By the time the canary is triggered, some funds elsewhere could already be compromised. This is a trade-off between caution and security.

What are the benefits of BitMEX’s approach for investors?

It avoids unnecessary disruption to Bitcoin’s supply and ownership structure unless a real threat exists. Investors can continue using and holding Bitcoin normally. It also reduces the chance of controversial network changes without clear justification.

BitMEX proposes canary fund for quantum threat

Written by Mahathir BayenaPublished Apr. 16 2026

BitMEX Research has proposed a “canary fund” mechanism to address quantum computing risks to Bitcoin without immediately freezing vulnerable coins.

The proposal suggests a soft fork that would only trigger a freeze if a quantum computer is proven capable of stealing Bitcoin, offering a more cautious, wait-and-see approach.

The system uses a special address generated from a “Nothing-Up-My-Sleeve Number” where users can send Bitcoin as a bounty to incentivise any quantum-capable actor to demonstrate the threat.

If funds from this canary address are spent, it would signal that quantum attacks are viable and automatically activate a freeze on vulnerable coins.

“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 said.

The proposal comes in response to BIP-361, which suggested pre-emptively freezing dormant quantum-vulnerable Bitcoin, drawing criticism from some community members.

BitMEX’s alternative would allow older coins to remain spendable unless a real quantum breach occurs, while also enabling participants to withdraw funds from the canary pool using multisignature safeguards.

At the time of reporting, Bitcoin price was $75,002.20.