How Much Bitcoin is Lost Forever? | Learn

Imagine this - after years of investing, John has finally reached that milestone of owning 1 Bitcoin. The day comes when John is ready to cash out. John plugs in his ledger to access his Bitcoin, but the password isn’t working. He tries multiple times with no success… Panic sets in as he tries everything to recover it, but there’s no “Forgot password” button to click. All the time, effort, and money John invested now feels like it’s slipping away. Unfortunately his Bitcoin is most likely lost forever.

And guess what? This isn’t a rare occurrence; it happens all the time. Each time it does, the total available supply of Bitcoin unintentionally shrinks a little more.

How Does Bitcoin’s Supply Work?

One of Bitcoin's defining characteristics is its limited supply. There will only ever be 21 million bitcoins in existence, a number that cannot be increased. This scarcity is intentional, designed to make bitcoin a deflationary asset, unlike fiat currencies that can be printed in unlimited amounts.

However, not all bitcoins that have been mined are still accessible. Over time, a significant number of bitcoins have been lost due to various reasons.

How Bitcoin Gets Lost

Lost Private Keys: Private keys are essential for accessing and managing Bitcoin. If a user loses their private key, they lose access to their bitcoins permanently. Since there is no central authority that can recover a lost key, these bitcoins remain in the blockchain, but they are inaccessible.

Forgotten Passwords: Many Bitcoin wallets require a password to access the private key. If the password is forgotten, and there is no backup, the bitcoins in that wallet become inaccessible.

Misplaced or Destroyed Wallets: Physical wallets, such as hardware wallets or paper wallets, are popular for securely storing private keys offline. However, if these wallets are lost, damaged, or destroyed, the bitcoins are possibly lost.

Inaccessible Storage Devices: Some users store their private keys or wallets on digital devices, such as computers or USB drives. If these devices fail or become corrupted, and there is no backup, the bitcoins stored on them can be lost forever.

Human Error: Simple mistakes, such as sending Bitcoin to the wrong address, can result in permanent loss. Even one simple change in a letter or number is an entirely different address. Since Bitcoin transactions cannot be reversed, once a transaction is completed, there is no way to recover the funds.

These lost bitcoins, though still part of the total supply, are effectively removed from circulation. While it's challenging to track exactly how much Bitcoin has been lost, certain estimates suggest that approximately 3-4 million bitcoins are lost forever. This represents around 14-19% of the total supply that will ever be created.

The Impact of Lost Bitcoin on Value

We're all likely thinking the same thing. Losing Bitcoin is never fun, it’s even a dreadful feeling. But looking at it from a different perspective the concept of lost Bitcoin introduces an additional layer of scarcity to an already limited asset. As more bitcoins are lost over time, the circulating supply decreases, which can potentially increase the value of the remaining bitcoins. Here’s how lost Bitcoin influences the market.

Increased Scarcity: With a fixed supply of 21 million bitcoins, every lost coin reduces the number available for trading or investment. This increased scarcity can drive up demand, as fewer bitcoins are available to meet market needs.
Price Appreciation: As scarcity increases, the value of the remaining accessible bitcoins may rise. Investors may perceive Bitcoin as an even more valuable asset, given that fewer coins are available over time.
Market Speculation: The uncertainty around how much Bitcoin is truly lost leads to speculation in the market. Some analysts believe that the actual number of bitcoins available for trading is significantly lower than reported, which could influence trading strategies and investment decisions.

The Future of Bitcoin’s Supply

As Bitcoin continues to evolve, the impact of lost bitcoin on its future cannot be ignored. With an estimated 3-4 million bitcoins, up to 19% of the total supply lost forever, this increasing scarcity could drive up Bitcoin's value over time. The reduced circulating supply might lead to higher prices, as fewer bitcoins are available for buying and selling. However it’s important to note that past performance of any investment is not an indication of future results.

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DISCLAIMER

This article is for information purposes only. It does not constitute investment advice in any way. It does not constitute an offer to sell or a solicitation of an offer to buy or sell any cryptocurrency or security or to participate in any investment strategy.

iTrustCapital is a cryptocurrency IRA software platform. It is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager, or adviser in the United States or elsewhere. iTrustCapital is not associated with and has no direct relationship with Bitcoin. iTrustCapital is not affiliated with and does not endorse any particular cryptocurrency, precious metal, or investment strategy.

Cryptocurrencies are a speculative investment with risk of loss. Precious metals are a speculative investment with risk of loss. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Clients do not receive a choice of custody partner. The self-directed purchase and sale of cryptocurrency through a cryptocurrency IRA have not been endorsed by the IRS or any regulatory agency. Historical performance is no guarantee of future results.

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