How Many Bitcoin Disappeared Forever?

Just like gold can be sunk deep under the sea or $100 can quickly be burned. Bitcoin also disappears from the Internet forever. Until people mined all 21 million coins, the actual amount available for trading or spending will be significantly lower.

More than 1.6 million Bitcoins disappeared

According to Coin Metrics – a blockchain research company – there are about 1.6 million BTC lost forever. This amount corresponds to about 7,61% of the total supply of BTC. Coin Metrics’s conclusion based on the distribution of existing Bitcoin supply through the parameter “lifespan” and trading activity of BTC. For some segments, the company used sampling statistics to determine lost amounts.

Specifically, “mined coins” are BTC coins that have been mined and put into circulation. As you can see, this number of BTC is not lost.

The most disappearing amount of Bitcoin is owned by “Hodlers.” It is an amount of BTC mined long ago (2-7 years ago) and held by long-term investors. Already 50% of these disappear forever. Note that the figures above reflect that Bitcoin is lost, not hacked, or stolen.

Besides, the data based on the hypothesis that 1,000,000 BTC owned by Satoshi Nakamoto is also considered as disappearing permanently.

We all know Bitcoin has a limited supply of 21 million coins. However, if the report from Coin Metrics is real, the actual number of Bitcoin maybe even less than we thought. Compared to the total circulating supply of Bitcoin on computer statistics, the exact overall amount is significantly smaller.

how-many-bitcoin-disappeared-forever

Last month, the Bitcoin network celebrated a milestone when 600,000 blocks were mined, bringing Bitcoin’s circulating supply to about 18 million BTC. However, the real circulating supply is much lower than that of 18 million. The total number of lost Bitcoin amounted to over 1.6 million, pushing Bitcoin’s actual supply to just over 16.4 million BTC.

There will be more Bitcoin lost

About 200,000 BTC lost in the two burglaries. 80,000 BTC hacked during the MtGox event in 2011. Also, nearly 120,000 BTC disappeared from Bitfinex in 2016. One cannot calculate the amount of Bitcoin lost and why. However, the report assumes that at least 1.5 million are likely to be lost forever.

At the same time, the actual circulating supply of Bitcoin is much lower than the number of blocks. With a liquid amount or about 16.3 million and less than 3 million left to mine, Bitcoin is becoming scarcer every day.

how-many-bitcoin-disappeared-forever
There are about 1.6 million BTC lost forever. This amount corresponds to about 7,61% of the total supply of BTC.

In the future, it will be more BTC lost, but that ratio will be much lower than in the past because people will have more tools to track their assets.

Meanwhile, a more complicated question is, is Bitcoin more scarce? And does BTC market capitalization take into account the number of coins lost?

Jonathan Levin, Chainalysis Strategy Manager, analyzes:

“It is a very complicated question. On the one hand, Bitcoin’s market capitalization does not account for BTC lost. However, the market has adapted to the actual supply and demand – just look at the trading behavior on the exchange”.

It is not known what Coin Metrics uses statistical methods to obtain such data. However, there is the fact that long-term hodlers, strategic investors are the ones who hold the most BTC. The reasons for the disappearance of Bitcoin may arise from several transactions with the wrong address, forgetting the private key due to carelessness or the death of a user.

Finally, there is an essential argument that the founder of Bitcoin owns 1 million BTC. Since Satoshi Nakamoto has disappeared since 2011, we can assume that this number of Bitcoin is also “gone forever.”

But most likely, one day, this massive amount of Bitcoin will be moved. At that time, the cryptocurrency market will be significantly affected.

Clara

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