how many bitcoins are lost

This many Bitcoins are lost forever

It’s no secret that everyone dealing with cryptocurrency has to store their Bitcoins safely and make sure to inform the sender about its correct Bitcoin address when receiving Bitcoins. Unless you do this, you can risk your Bitcoins being lost forever because the blockchain is not designed to be able to modify existing transactions and restore wallets if you haven’t made a backup.

Nearly 4 million Bitcoins can be lost forever

According to an analysis conducted in November 2017 by Chainalysis – a Danish developed software that analyzes Blockchain transactions – shows that approximately 3.79 million Bitcoins are lost forever based on a high estimate of 2.78 million being lost based on a small estimate. Whichever estimate is closest to the real reality, one must admit that that is a lot of Bitcoins – which, in addition, have a very high value based on today’s Bitcoin value.

If the high estimate is closest to the reality, it corresponds to approximately 23% of the existing supply of Bitcoin at 16.7 million being lost forever.

The estimates are based on analyzes made by the core technology behind Bitcoin called Blockchain, where all Bitcoin transactions from its inception until real-time are saved. It has given Chainalysis a detailed picture of how many Bitcoins are lost based on different trends, in particular, the age of the respective transactions as well as the activity of existing Bitcoin addresses have played a role. Estimates do not include Bitcoins, which have been stolen, as these are still in circulation, but only Bitcoins, which they think, never get in circulation again.

Poor security and low exchange rates are the cause of many lost Bitcoins

Chainalysis concludes that in particular, in 2009 and 2010, a large portion of these Bitcoins was lost. This is because the security of the respective wallets was significantly worse than you experience today and that the price at that time was microscopic compared to today, so many easily took on the task of storing their Bitcoins. At that time, you could have several thousand Bitcoins at a total price of just a few hundred dollars, so many did not worry too much they were going to throw their Bitcoin wallet away with several thousand Bitcoins.

For this reason, a large part of the lost Bitcoin’s is due to human error, and it is caused by either having not stored their Bitcoins correctly or sent them to an incorrect address. As people, we do not stop making mistakes why there will continue to be Bitcoins lost in the network. However, it will not be at the same rate as you have experienced before, as the security and understanding of how to handle Bitcoins have improved significantly over the years.

Approximately 1 million Bitcoins can come back in circulation

The reason for the two highly fluctuating estimates is mainly due to some of the first Bitcoins, which are believed to be the founder of Bitcoin Satoshi Nakamoto. It is believed that the person owns about 1 million Bitcoins, which have never left their wallets. They have been stored at the same addresses since the beginning, so you can keep up with them if they recur.

Whether they come back in circulation is impossible to say – but it’s an option why you may not necessarily consider them to be lost forever. At the moment they are not in circulation within the network, and they are likely not to be in the near future, but it is not impossible. Should all these Bitcoins come into circulation in a concise period of time, then you’ll probably see that Bitcoin’s price drops slightly due to a sudden increase in supply.