Monday, December 5, 2022

Over 2.7 Million Bitcoins Lost Forever – Secure Your Coins!

Over 2.7 Million Bitcoins Lost Forever – Secure Your Coins!

Chainalysis’ new forensic investigation of the Bitcoin blockchain suggests 2.78 million as the conservative number for the amount of bitcoins that have been permanently lost.

Also read: Second Largest Bank in South Korea to Create Digital Asset Wallet

Join the Bitsonline Telegram channel to get the latest Bitcoin, cryptocurrency, and tech news updates:

Nearly 4 Million Bitcoins Could Be Lost

For years now, horror stories have abounded of users losing devastating amounts of bitcoins.

And with the bitcoin price now seemingly flirting with $10,000 USD, the time has long come for casual holders to take serious stock of what precisely can go wrong — whether that be self-negligence or otherwise.

Now, courtesy of a groundbreaking report from blockchain detective firm Chainalysis, the space has ballpark figures through which to frame the amount of bitcoins that have been lost for good.

Chainalysis‘ more conservative estimate is that 2.78 million bitcoins have been lost since the first-mover cryptocurrency was created almost a decade ago. The firm’s research suggests it’s possible upwards of 3.79 million bitcoins have been figuratively “burned,” however.

The news might not be all bad, though. Remember only 21 million bitcoins will be mined, ever. Remove four million units from that finite total and you potentially increase the value of the remaining coins. And one bitcoin divides into 100 million satoshis, so there’s still plenty to go around.

That’s a lot of lost BTC!

The Nakamoto Factor

Notably, Chainalysis’ major assumption is that Satoshi Nakamoto’s original trove of 1+ million bitcoins will never move again. Therefore they could be considered “lost” on one level, but not irreversibly so.

Beyond that assumption, investigators were able to use empirical analysis to separate a great deal of “dead” wallets from the wallets of long-time holders thanks to the recent spate of hard-forks in the Bitcoin community.

For example, investigators found that many BTC accounts that seemed totally inactive came “online” again after the August 1st Bitcoin Cash hard fork, presumably to transact with their new free coins. Investigators thus ruled out these sleeper accounts as belonging to holders.

Accordingly, Chainalysis estimates that anywhere between 17 and 23 percent of all bitcoins that should theoretically be in existence today are effectively dead, making the circulating supply of BTC significantly scarcer than surface data suggests.

The Horror, The Horror: We’ve Seen It All So Far

There are several ways for bitcoins to meet their doom, and the community’s seen astonishing examples of each of these ways over the past few years.

There’s been cases of:

  • lost log-in passwords
  • lost private keys
  • destroyed hard-drives
  • law enforcement seizures
  • holders who died without passing on their keys

Regarding that last point, many of us recall how Dread Pirate Roberts — the former operator of the infamous Silk Road dark web marketplace — had more than 144,000 BTC seized by FBI agents. What many don’t know, however, is that the FBI were only able to seize one of DPR’s wallets.

Ensuing research has suggested that DPR received approximately 633,000 BTC during his tenure at the Silk Road. That means DPR’s remaining  ~489,000 bitcoins are likely among the BTC lost forever. This horde alone should make bitcoin’s total supply two percent scarcer.

Much more applicable to everyday users, though, is the case of James Howells — the Welsh man who threw away a hard drive with 7,500 bitcoins on it back in 2010. That sum of bitcoins would be worth over $72 million at press time.

Howells’ devastating mistake? He didn’t back-up his hard drive.

Safety First, Folks

If you hold anything more than a trivial amount of BTC, you need to immediately explore ways in which to “insure” your holdings.

Consider a safety deposit box, or multiple, in which to safeguard your private keys and relevant passwords indefinitely. Or perhaps the added security of a Coinbase bitcoin vault is right for you.

Cryptocurrency hardware wallets from the likes of Trezor and Ledger are casual and secure alternatives, too. Finally, consider some way to pass on your crypto-wealth to loved ones should you meet an untimely (or timely) end.

Whatever you do, do something. Get that hard drive you’ve been looking at. Get two for that matter. With the bitcoin price ever-surging, the stakes literally couldn’t be higher.

What’s your take? Have you ever personally lost any BTC before? Let us know how in the comments below!

Images via Fortune, QZ

Bitsonline Email Newsletter