Bitcoin, being a decentralized and secure digital currency, has seen its fair share of lost coins. These lost bitcoins are typically inaccessible due to forgotten passwords, discarded hardware, or other unfortunate circumstances. Approximately 7.8 million Bitcoins have been lost, translating to $484.06 billion. Whether these lost Bitcoins can be recovered or not, is a question we will try to explore in the article. 

What is Lost Bitcoin?

Lost Bitcoin refers to the digital currency that holders can no longer access or locate. Bitcoin, like other cryptocurrencies, is stored in various types of wallets, including software, hardware, custodial, and non-custodial options. Regardless of the blockchain wallet type, there is always a risk of losing access to Bitcoin.

When Bitcoin is genuinely lost, it becomes irretrievable. While temporary misplacement is possible, such as transferring funds to the wrong wallet, complete loss of access renders the Bitcoin permanently inaccessible.

The surge in lost Bitcoin instances coincided with the rapid growth of the cryptocurrency industry in 2021. Many early investors, who acquired Bitcoin when its value was minimal, found themselves unable to locate their holdings as their worth skyrocketed over the years. This phenomenon demonstrates the significant amount of Bitcoin lost over time.

How Do Bitcoins Get Lost?

There are various factors contributing to lost bitcoins:

Inaccessible Wallets: Some early adopters and miners stored their bitcoins in wallets that are now inaccessible due to lost passwords, hardware failures, or other reasons. Misunderstanding the importance of the seed phrase poses a significant risk. Seed phrase loss renders the wallet and associated cryptocurrency inaccessible. Storing seed phrases securely, such as in a safe, is recommended to prevent loss.

Destroyed Private Keys: Losing access to the private key associated with a Bitcoin wallet address renders those bitcoins irretrievable.

Negligence: Over the years, people have accidentally deleted wallets or discarded old hard drives containing bitcoins.

Burned Coins: Some individuals intentionally involve in burning bitcoin by sending them to addresses with no known private keys, effectively removing them from circulation.

Forgotten Passwords and Hardware Failures: Countless individuals have lost access to their bitcoins due to forgotten passwords or hardware failures.

Real Cases of Lost Bitcoins

There are real cases of individuals who lost bitcoins.

1. Rhonda Kampert: 

Rhonda, an early adopter, bought six bitcoins in 2013 when they were priced at about $80 each. She spent some of her digital money but forgot about the rest. In 2017, when Bitcoin’s value soared to nearly $20,000, she tried to log in and cash out but realized she was missing some login details.

2. James Howells:

James mined about 7,500 BTC using his gaming computer in 2009. Unfortunately, he accidentally threw away the hard drive containing the bitcoins. The value of those lost coins today would be *tens of millions of dollars. 

3. Stefan Thomas: 

Stefan Thomas, a software developer discovered that his old Bitcoin wallet of over 7,000 BTC was worth over $320 million in 2021. Stefan bought the Bitcoin holding back in 2011 when one BTC was worth less than $20. This would have still been a substantial investment, but nothing close to the value it would hold a decade later.

How Many Bitcoins Have Been Lost?

According to data shared by on-chain data vendor IntoTheBlock, it appears that a substantial portion of Bitcoin’s total supply has slipped out of circulation. Out of the slightly over 19 million Bitcoins mined, approximately 29% have remained inactive for the past five years, as highlighted in a tweet from the data aggregator.

The implications are significant, suggesting that a considerable number of Bitcoins may have been irreversibly lost over time. Glassnode’s tweet echoes this sentiment, indicating that 7,781,224.168 BTC might have either been hodled or permanently lost.

Cane Island investment manager, Timothy Peterson, estimates that around six million BTC have vanished, constituting a substantial portion of Bitcoin’s finite 21 million circulating supply. If Peterson’s assessment holds true, nearly 30% of Bitcoin’s total supply is now beyond retrieval, amounting to an astonishing $372.6 billion at the current valuation.

While IntoTheBlock’s data mirrors this narrative, indicating that 29% of Bitcoin hasn’t moved in half a decade, it’s crucial to acknowledge that not all dormant Bitcoin may be lost. Some users may intentionally hold onto their BTC for the long term, storing them in wallets for extended periods. However, considering various estimates on lost Bitcoin, it’s plausible that a significant portion of inactive coins represents irreversible losses.

Timothy Peterson’s reference to Cane Island’s research paper underscores the ongoing trend of Bitcoin loss. The paper suggests that approximately four percent of circulating Bitcoin is lost annually.

Can Lost Bitcoins Be Recovered?

While most lost bitcoins are indeed irrecoverable, there are some avenues for potential recovery:

Despite Bitcoin’s renowned security features, which prevent unauthorized access to funds, they can pose a challenge for rightful owners as well. High-tech firms specialize in helping users recover lost private keys. They charge fees for their services and may be able to retrieve a portion of lost coins. As mentioned earlier, Rhonda bought six bitcoins in 2013, priced at about $80 each.

In 2017, when Bitcoin’s value soared to nearly $20,000, she tried to log in and cash out but realized she was missing some login details. After years of unsuccessful attempts, she turned to crypto treasure hunters Chris and Charlie Brooks. They successfully recovered her wallet containing three-and-a-half bitcoins, which were then worth $175,000.

While it’s estimated that around 20% of lost coins could potentially be retrieved, representing a value of up to $6 billion, the process isn’t foolproof. Factors like encrypted private keys and failed hard drives present avenues for recovery, but success isn’t guaranteed, with approximately half of cracked wallets turning out to be empty. T

his demonstrates the complex interplay between security and accessibility within the cryptocurrency landscape, where lost fortunes may still lie dormant, waiting to be rediscovered.

Security Considerations

Bitcoin’s security features protect against unauthorized access but can also hinder legitimate users. Losing access to your coins is a common challenge.

Beware of crypto scam claiming to recover lost bitcoins. Always verify the legitimacy of recovery services:

 Avoid firms that ask for upfront fees.

Verify their physical address and communication channels.

Never share sensitive information like bank account details.

Conclusion

As Bitcoin’s scarcity increases, understanding the impact of lost coins becomes crucial for investors and enthusiasts alike. Remember that lost bitcoins contribute to the scarcity of this digital asset, making it even more valuable over time. While some recovery efforts are successful, many remain inaccessible forever.

The post Approximately 7.8M Bitcoins Have Been Lost. Can they be Recovered? appeared first on CoinGape.

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Filed under: News - @ January 1, 1970 12:00 am