Just like how gold bars may sink to the bottom of the sea forever, and cash can be burned, Bitcoin can also disappear forever on the internet.
Researchers have found that 64% of Bitcoin has never been used, and a significant portion of it is now lost forever.
According to the latest research from Chainalysis, a digital forensics company specializing in Bitcoin blockchain, between 2.78 million and 3.79 million Bitcoin have been permanently lost
These figures indicate that 17% to 23% of all Bitcoin is now gone.”
Today, each of these Bitcoins is worth $24,474
By the year 2140, when all 21 million Bitcoins have been mined, the actual amount available for transactions or spending will significantly decrease.
Stolen Bitcoins don’t count as lost since they can still be used. What we’re referring to are the truly lost Bitcoins.
There are many reasons why Bitcoins get lost, such as the owner passing away, hardware failures, or even just carelessness.
In 2013, a Welshman named James Howells accidentally threw away an old hard drive containing his private key for his Bitcoins, resulting in a loss of 7,500 Bitcoins.
If Howells had been a bit more careful, he would be a millionaire by now.
Today, the hard drive remains buried under tons of garbage at the Newport waste disposal site.
“When I went to the landfill yesterday, the first thing I thought was ‘I’ve had it’,” he told the BBC. “I had the hard drive in a desk drawer for three years and forgot about it. And after my wife and I had a clearout during a spring clean, it got thrown out with the rubbish. I didn’t realise what I’d done until later.
To this day, Howells is still considering excavating the landfill to find the lost hard drive.
“Modern landfill sites are complex engineering projects and digging up the landfill would cause environmental issues,” he said.
His story inspired the plot of an episode in the TV show “Silicon Valley,” where characters search for a small hard drive in a landfill the size of a football field.
In 2010, David Finkelstein from London mined 50 bitcoins using his computer.
However, the constant noise of the computer working day and night made him annoyed, so he stopped mining.
He put the bitcoins on a USB drive and then forgot about it.
It was only after bitcoin became popular that he remembered the USB drive, but the storage space had been overwritten by his wedding video.
To receive Bitcoin, users must have a Bitcoin address, which is a string of 27 to 34 letters and numbers that can be used to protect anonymity during transactions.
They operate similarly to private bank accounts, but if the data is lost, then the owned Bitcoin will also be lost.
Bitcoin wallet keys usually look like this: 0xFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFEFEAAEDCE6AF48A03BBFD25E8CD0364140.
These unmemorable keys have caused countless tragedies of lost bitcoins.
Many people have tried hypnosis or even supercomputers to crack their accounts, but unfortunately, it has always been in vain.
For these people, there is nothing more cruel than seeing the value of Bitcoin skyrocketing.
So where did those Bitcoins go?
The answer is, everywhere and nowhere.
They are there, but like a separation of yin and yang, you can no longer touch them.
This is the tragedy and beauty of cryptocurrency.
In the future, more Bitcoins will be lost, but the rate at which they disappear will be much slower than before. This is because now that the value of Bitcoin is so high, people will be more cautious in storing them.
In late 2013, when the price of Bitcoin had reached $980, an Australian man named Howard Alex suddenly remembered his Bitcoin wallet. This was back in 2009 when digital cryptocurrencies were still in their infancy, and one could easily mine a few Bitcoins a day with a regular home computer.
“When I inserted the USB flash drive to try to access the files again, the flash drive was damaged.”
“This is the worst mistake I have ever made in my life. Never back up anything on a hard drive or USB flash drive,” said Alex, with a hint of sadness in his story.
Martin Davidson, co-founder of the Melbourne-based non-profit Blockchain Centre and Global Head of Business Development for Blockchain, says that Alex’s story is not uncommon.
“Lost cryptocurrency is easier to lose than a bank account,” he said.
“If you lose the key, you can never recover it because of the mathematical principles and the strength of the encryption system involved.”
“People need to understand that this technology emerged from the cypherpunk movement. It uses encryption technology to protect personal freedom and privacy from state intervention.”
“It was never designed to be user-friendly, and clearly the usability and design aspects of these systems are still in their infancy.”
Every few months there is a major news story about someone losing their Bitcoin in some dramatic way.
The problem is, at first, no one knew how much Bitcoin would be worth.
At the prices they bought in the early days, they had no incentive to think about storage.
Even Elon Musk doesn’t know where his Bitcoin is. A friend gave him some Bitcoin, but he doesn’t remember where those cryptocurrencies are now.
Even with caution, Bitcoin can still disappear without a trace.
Clifton Collins bought 6,000 bitcoins in 2011 and 2012 with the money he earned selling marijuana. He was then arrested in 2017 and sentenced to five years in prison.
Collins stored his bitcoins in 12 accounts and printed out the codes, which he hid in a box for fishing gear.
The landlord threw away the box while cleaning the room, without realizing what was inside.
Michael Yang, who operates a cryptocurrency exchange in the Bay Area, told The New York Times, “A friend of mine had half of the private keys for the Bitcoin, and the other half was with his business partner.”
“Then the partner passed away.”
“It’s a tragedy.” Now, the surviving friend can’t access those 500 Bitcoin.
It can be said that Bitcoin is even scarcer than many people imagine.
As of July 2018, there were a total of 6 million bitcoins inaccessible and permanently lost on the blockchain.
Therefore, the maximum supply of Bitcoin cannot reach 21 million.
In recent years, prominent investors and analysts in the cryptocurrency space have been saying that the price of Bitcoin could reach $100,000 to several million dollars because only 15 million bitcoins exist.
The founder of Litecoin, Charlie Lee, urges cryptocurrency traders and enthusiasts to first strive to own one Bitcoin before buying any other coins.
Yes, working hard to buy or mine Bitcoin, and then forgetting that you ever owned them, sounds like a poem by Keats – romantic and melancholic.
Lost bitcoins are like letters delivered to an indefinitely unoccupied house; they are there, but no one can open the door to retrieve them.
Some people believe that even Bitcoin’s mysterious creator Satoshi Nakamoto may have lost access to his private keys.
“Out of the 1 million Bitcoin he mined, not one has ever moved,” said Kim Grauer, a senior economist at Manhattan-based digital forensics firm Chainalysis.
