Satoshi Nakamoto introduced a limited supply of 21 million coins when he built the Bitcoin protocol. Throughout time, many of those coins have become inaccessible. So how many Bitcoins are lost by now?
How many Bitcoins are lost?
There is no exact answer to this question. It is extremely difficult to correctly measure the variables which help us understand which coins have permanently lost their ownership in the Bitcoin network.
That being said, several firms have made rough estimations in the number of lost coins:
- According to Bitcoin.com, approximately 20% of Bitcoin’s circulating supply has become inaccessible (worth of 3-4 million coins).
- Investopedia, another group of market researchers believe that 20% Bitcoins are lost and unrecoverable.
- Chainalysis, a cryptocurrency analysis firm reported that around 17% to 23% Bitcoins are lost. This amount equals to 2-4 million Bitcoins.
How are these Bitcoin lost?
Bitcoin can be lost due to various reasons:
- By Malware Attack: The most common method for stealing crypto coins is attacking by malware. It can be through Ransomware; Viruses, Fake links (spoofing); and Phishing (unauthorized access to personal information).
- By Cyber-attacks: Cyber-attacks are the second-largest problem and a frequent occurrence in new or developing cryptocurrencies. Hacker attacks are increasingly common, and fraud methods are becoming more advanced. While not necessarily lost, the hacked coins cannot be exchanged on any cryptocurrency trading platform.
- Lack of legal framework and legal risks: Bitcoins are intangible digital assets for which there are no property rights. Once Bitcoin is stolen from their respective wallets, the owner is unable to identify the person behind the public address unless it is whitelisted.
- Loss of Private Keys: Private keys allow users to access and use their funds. Once lost, users need to make sure a mnemonic phrase is at hand. If that is lost too, the coins are “lost”.
- Due to Transaction Mistakes: Sending Bitcoin to the wrong address also leads to losses. The transaction cannot be canceled, so the amount sent cannot be refunded or reversed.
Is anyone able to access lost Bitcoin?
Once users of the network lose access to their keys, they are unable to access and claim their Bitcoin.
The same goes for coins that are illegally obtained.
On the positive side, however, stolen Bitcoins can be traced and are recoverable. When the funds enter a whitelisted wallet, authorities will be able to backtrack all necessary information and potentially capture the cybercriminals.