Bitcoin may be virtual, not physical, still like most things in life, they do get lost or stolen.
In 2017, a study conducted by Chainalysis, a digital forensics firm that studies bitcoin blockchain, found that 3.79 million bitcoins are already gone based on a high estimate and 2.78 million based on a low one. The implication of these numbers is that 17 to 23 percent of existing bitcoins are lost. Chainalysis findings are based on a detailed empirical analysis of the blockchain, where all bitcoin transactions are recorded.
The numbers may have changed today but given that higher bitcoin prices have provided enough incentive for people to take extra measures towards protecting their accounts, it is likely not growing at the same rate.
Experts at Fortune also made the point that although more bitcoins will be lost in the future, the rate at which they disappear will be much lower than in the past since, now they’re so valuable, people will be more vigilant about keeping track of them.
The total available supply of bitcoin is capped at 21 million, with new ones released every day. As at 2017, the total number of bitcoin already mined were at 16 million according to Blockchain data. The current circulating supply is over 17 million (17,662,937.5). The implication is that there are 3,337,062.5 bitcoin left to be mined. The number changes about every ten minutes when new blocks are mined. Today each new block adds 12.5 bitcoin into circulation and 573,035 blocks have been mined already.
Nevertheless, the definition of “lost” may vary depending on who you ask, according to Luno, a cryptocurrency exchange with presence in 40 countries including Nigeria. The exchange notes that “stolen (or hacked) bitcoin do not count as lost because the thieves have access to it.”
It is unclear how many bitcoins have been stolen. The largest bitcoin hack saw 850,000 bitcoins wiped from Mt. Gox. Another 120,000 bitcoins were stolen from Bitifinex in 2016. Together, that adds up to about 970,000 bitcoin. It is however likely that these stolen bitcoins are still in circulation.
Some of the ways bitcoin gets lost include when the owner lose access to their wallets, become ill or die. There have been cases where people lose their bitcoins in the attempt to dispose their laptops or hard drives. A well-known case was James Howells, an IT worker who threw away a hard drive that contained 7,500 bitcoins he had mined at virtually no cost in the early days which would have amounted to significant value today. Howells lost it forever.
It is also possible to forget you ever owned bitcoin. In the early days when the value was much lower than it is today, people could mine at no cost and just forget they had it on their laptops. In that case, if the bitcoin owner dies without sharing his or her credentials with anyone, that bitcoin is lost for good.
People can also lose their bitcoins by sending it to the wrong wallet address. Unlike fiat money, bitcoin transactions to wrong accounts cannot be reversed.
There are a couple of measures to take to avoid losing your bitcoin. The first is to always double check the address you are sending it to is correct. Luno recommends that you copy and paste the wallet address or use a QR code.
Second, make sure your private keys are safeguarded in a storage you can trust. An exchange like Luno for instance, helps take care of the security and look after your private keys, particularly the password that gives you access to your bitcoin.
