Table of Contents
What happens to the lost Bitcoins which either were mined but not properly stored or the owner held on till death with no one having access to the coins?
Proof of Keys
If you have been in the crypto space for a while now, you will most probably have heard the phrase “never share your private key with anyone”.
Cryptocurrency, unlike fiat, is a decentralized form of currency that doesn’t allow third parties into the original owner’s possession unless they get permission to.
However, being conservative, the number of lost Bitcoins per 2 months worldwide could sum up to at least 1 full BTC. We are talking about Bitcoins which are not coming back, atleast as much as we currently know.
Cryptoline News recently covered a story of a Canadian CEO, the gatekeeper of a crypto exchange who passed away with over 100 million dollars in lost Bitcoin and other cryptocurrencies.
It is good to know that the story picked up much coverage because it is a cryptocurrency exchange. The good question then is what about small to medium sized investors who have either lost their private keys or died and not even their famalies know they had Bitcoins?
The truth is the number of lost Bitcoins or other cryptocurrencies is hard to track as a wallet being inactive doesn’t translate to its funds being gone or frozen.
Nevertheless, it doesn’t change the fact that the number of lost Bitcoins from the current circulation increase on a daily basis if not on, then on a monthly basis. Ever transferred funds from a wallet to another and later realise that you left behind a few satoshi’s? Think of the millions of other wallets that leave behind these few, to them “worthless” satoshi’s on wallets they never revisit or never reused the address again.
Lost bitcoins “not your keys, not your coin“
There have been numerous speculations on the number of lost Bitcoins but coming to an exact number is not possible. Just to get an overview of some lost Bitcoins and cryptocurrencies which might never be recovered again, we will take a look at some well known cases.
Satoshi’s coins, though not lost yet could be seen as either lost or on the way to being lost. Nakamoto’s wallet has been inactive since 2009 and his identity is something many have lost hope in trying to figure out.
The wallet is said to cotain over 1,000,000 Bitcoins and could be on the way to being lost if the wallet stays inactive or if Satoshi himself dies (something some already suggest) without handing over the keys.
This is the most recent incident still fresh in the mind of crypto traders and investors in Canada who happened to have used the exchange. According to reports, 26,488 Bitcoins are said to be held in cold storage and might never have another owner agian.
Other coins involved in this loss include 1,000,000 XRP, 200,000 LTC and 429,000 ETH among others. Some unconfirmed reports, however, say the exchange has gained access to the Litecoins though it’s still unclear how they did.
According to a research carried out by Chainanalysis last year, over 2,700,000 Bitcoins have been lost either through transactions, or are out of circulation or lost via strategic investors.
Remember the British IT guy who lost a hard drive containing 7,500 Bitcoins and had to dip through the area he thought the hard drive would have been dumped at? Well, he might have given hope on the adventure already.
This is of course just limited to Bitcoins. Millions of other coins have been lost either because they were tainted after a hack just like the NEM – Coincheck hack, by the owner losing their keys or through the passing away of the owner.
On a smaller scale, wired.com lost 13 Bitcoins after they received a Bitcoin miner and set up the rig in their office which ended up mining coins. The company then had a decision of either destroying the coins or giving it to charity. Well the company decided to throw the private keys and those lost Bitcoins are not coming back.
It is expected that more coins will get missing in the future be it Bitcoins or other cryptocurrencies. However, the rate of this loss will be less compared to what we see today as many people after seeing how high cryptocurrencies can go turn to keep their keys more surely.
However, everything being equal, those coins are not coming back, especially in the case of Bitcoin.
It is safe to say Bitcoin can be divided further into bits (satoshi’s) and that the more coins get lost, the higher the value of the circulating Bitcoin. Nevertheless, imagine an exchange like Binance or Coinbase going through a similar route as QuadrigaCX.
“Lost Bitcoin only make everyone else’s coins worth slightly more. Think of it as a donation to everyone” Satoshi Nakamoto
Whether these lost Bitcoins are gone for good or if it creates a new industry of “Bitcoin Hunters” who will try to recover the Lost Bitcoins is something which is expected to be seen.