Nearly 4 million bitcoins are lost forever

Just as gold bars can get lost in the sea or $ 100 bills burn out, bitcoins can disappear from the Internet forever. By the time of extraction of the entire stock of bitcoins in the amount of 21 million coins in 2040, the real number of coins available for trading or spending will be significantly less.

According to a new digital forensic study from the company Chainalysis , whose specialists regularly study Bitcoin-blockchain, the number of bitcoins lost forever is from 2.78 to 3.79 million bitcoins. That is, in fact, we are talking about the unavailability of 17% -23% of existing electronic coins, the cost of each of which, by today's standards, is more than $ 8.5 thousand.
')
And if many other experts only speculated on the magnitude of the losses, Chainalysis presented results based on a detailed empirical analysis of the blockchain, in which all Bitcoin transactions are recorded.

As can be seen in the above infographic, Chainalysis divided the existing stock of bitcoins into segments, based on features such as the age of virtual coins and operational activity. To determine losses in some segments, the company used statistical sampling.

The Mining 2017 segment in infographics reflects the loss of coins mined using the relevant activity this year. It is assumed that all these bitcoins are safe and sound. The “Transactions” category takes into account data on all transfers or payments for the last year, and losses in it are small. The same can be said about the category “Strategic Investments”, which includes all of the savings Coin over the past 2 years.

Another interesting category is Bitcoins “withdrawn from circulation”, that is, coins mined in the last 2–7 years, owned by long-term investors, which today are called “hodlers”, as well as coins from 2009 and 2010. Losses in this segment account for the lion’s share of all the lost Coin ever. Below is a table that contains these and other segments used in the study.



These figures take into account only completely lost bitcoins, that is, the table does not take into account whether coins were stolen or stolen as a result of hacker attacks, since it is assumed that the attackers retained control over them.

It is also important to note that the values ​​given in the table are also based on a pessimistic estimate, while the optimistic scenario assumes only 30% loss of Hodler’s savings, and the total figure of 2,767,668 thousand more inaccessible bitcoins. In both cases, a rather important assumption is made that coins belonging to the inventor of Bitcoin Satoshi Nakamoto have also disappeared forever.

In the future, even more bitcoins will be lost, however, the growth rate of this indicator will decrease significantly, since their current value motivates people to be more attentive to the cryptocurrency storage. As a result of a situation similar to that when the owner of a hard disk with a key to 7500 bitcoins, carelessly threw it away , thereby losing a whole fortune, hardly repeated in the future. Meanwhile, the results of the work of Chainalysis suggest an important idea that the shortage of Bitcoin seems to be underestimated. Naturally, the question arises whether this fact is taken into account by the current BTC cost quotes.

"That's a very difficult question. On the one hand, direct calculations of market capitalization and related indicators do not take into account lost coins. Given the high speculative nature of the cryptocurrency sphere, such calculations fully suggest that we have a market model that affects any expenditure activity, said Kim Grauer, chief economist at Chainalysis. - And at the same time, the market has adapted to the actual supply-demand ratio. Moreover, the history of monetary regulation shows that reducing or increasing fiat reserves to influence exchange rates is a well-known and common practice. Therefore, the answer is yes and no. ”

Lost Bitcoins and Satoshi's Secret

Chainalysis, which has the US Tax Service and Europol on the client list, has made a name for itself in the Bitcoin-world due to the high-quality processing of a large array of information gathered and complex research of blockchain-purses. Law enforcement agencies have long and actively relied on the service of the company, supplying them with detailed analytics on the subject of who owns a particular currency, as well as its movements.

The company does not provide any specific information about its methodology, but its representative shared some details about how Chainalysis determines that certain bitcoins were lost. An important indicator appears when a fork occurs in the blockchain, as, for example, it happened this summer during the creation of the Bitcoin Cash fork. Such events may lead to the fact that the owners of previously seemingly inactive wallets begin to conduct transactions, which creates opportunities for statistical analysis.

Such situations make it possible to make adjustments to the digits of the “Khodler” category - wallets owned by people who entered the world of Bitcoin even before all the current hype, and at the same time constitute the largest source of uncertainty about whether funds were stored on such wallets or just accumulated for the future.

As for the 2% of the “Transactions” category, which Chainalysis identified as lost, according to the company, this figure was calculated on the basis of a thorough examination of all messages on the Internet about ever lost coins. We are talking about cases of incorrectly sent transactions or loss of a private key as a result of death or carelessness. The company adds that statistical extrapolation has not been used in the calculation of such losses and the figures in this category require further adjustments to be made over the next few years.

And finally, another important question concerns the fate of Bitcoins belonging to the creator of the cryptocurrency, hiding behind the pseudonym Satoshi, the latest reliable news from which came back in 2011. Chainalysis suggests that about 1 million bitcoins are stored in Satoshi’s wallets (the company promises to provide more precise value later this year). After examining them, the specialists of Chainalysis made the assumption that all these coins, mined back in the times when the reward for the block was 50 Bitcoins, and they could be mined on a regular laptop, lost forever. However, this is a very serious assumption, and if it turns out to be wrong, the number of bitcoins in circulation can suddenly and suddenly increase, triggering a shock on the market.

Fortune also asked Chainalysis what surprised the company's employees most when working on this research.

“To begin with, we shared our findings with a narrow group of people and each of them was surprised to various degrees by the scale of the losses. But the most surprising and interesting, in my opinion, moment is in an attempt to determine what to count and record in “losses” and what is not, and the deeper you study this question, the more complicated and confusing everything becomes, ”Grauer shared his opinion .

¹ Bitcoin rate is specified at the time of publication of the original material in the Fortune publication, and at the time of publication of the article on Geektimes, the cost of bitcoin exceeded 10,900 thousand dollars.