Bitcoin Forum

For hypothetical purposes, let's say there are 20million Bitcoins in circulation (it's less than that I know). 

A company that has possession of 5 million coins has terrible private key management.  Their building burns down, along with it, all of their private keys and backups (again, they were stupid). 

I know this scenario is a stretch - but what happens in the future if all of a sudden a serious percentage of Bitcoins are unspendable (and all at once)? 

Will we as a society decide to "replace" these coins and put more back into circulation?  Or ride the deflation wave?  Everybody's coins become more valuable?  Even if everybody depends on the value?

From the Bitcoin Wiki:

https://en.bitcoin.it/wiki/FAQ#But_if_no_more_coins_are_generated.2C_what_happens_when_Bitcoins_are_lost.3F_Won.27t_that_be_a_problem.3F


That should answer your question.

Its an interesting question, but i personaly think that the coins would be replaced if the coins were to be proven indees as unrecoverable.
But ure right when you say that the scenario as a stretch, because theres no way on earth that someone would have 25% world's coins and risk loosing them in such a stupid way.
Even tho bitcoin now has no instrument of handling these scenarios, i believe that there will be some sort of oversight that would react in cases of such events.

cheers

You would need a hard fork to replace coins in a scenario like that. You would have to define that those coins cannot be spent by the original keys and that a different private key can now move them.

I don't see that happening, the coins would be gone.

To me its a feature; stupid people loosing coins means fewer stupid people deciding what the economy should do! In reality nothing REAL is lost - we would still have the same amount of cars, oranges and houses as before the event.

Statistically at some point all the bitcoins/bits will be lost.  :o

I personally believe all economies should really be deflationary. I mean the effort or cost to make a car should be decreasing generally over time as companies become more an more efficient/better at making the 'same' product. Sadly we have been feed the lie for the last hundred years that inflation is the norm. Bitcoin returns us to a defaltionary cycle. The only products that's should increase in price should be scarce resources or products using scarce resources.


Ps. Don't believe the bullshit that we are feed that deflation leads to people putting off purchases, with gas being a bit cheaper for most of us in the last 6 months did anyone buy less gas for their cars? In fact I personally probably bought more.

So there will be a time in history that not one bit will be lost? Sure it will take many many years but it will happen at some point.

This is  an interesting question, would the coins actually be replaced if so how would they do that on such a massive scale assuming of course that it was possible to have that many coins in the first place?

Does this mean they can be replaced to the average joe who loses them?

Damn if they lost them like that they deserve to never get a single coin back, i back up my back ups and i do not have anywhere near that amount hehe.

Thanks

If this come to pass, coins being lost, as will be Bitcoin?

What if coins are lost for some reason and we (general population) is not aware of the loss. Lets say it was an uber rich family and for some reason they lost 80% of their coins due to stupidity and they didn't tell anyone for fear of xyz.

It will be noticed in due time. The 5milBTC wouldn't move. I'm sure somebody will find it and just sit and watch it.

It's not about fear , We can always see the blockchain address and people are desperate , if someone have that many bitcoin in single address or multiple and they won't move for a month or over , people will start noticing eventually and the price will keep rising.
Though if we think of it ! that will be 25% of the coins that will be destroyed , so price can go much much higher.




That's not possible to replace these coins , you cannot just put more in the blockchain , that will be a fake blockchain and no one will mine on it , so they just become less available and price increases

The remaining coins gain value proportionately as they have suddenly become more scarce. By 2020 the companies established around bitcoin will be both wealthy and secure.

So you're saying there will be a time in history when not one person will backup their private keys?

You're looking at some bitcoins being lost over time, which you think will eventually add up to all bitcoins.  But that would require 100% of all Bitcoin users to lose 100% of their coins. 

I get this and I'm TOTALLY in favor of it.  However, a scenario where a large percentage is lost all at once - would that not disrupt the economy?  All of a sudden product prices should move down because the Bitcoins are worth more.

I get over time the value will compensate - but what about all at once?  What if we're stupid enough to trust a 3rd party to hold coins (for whatever reason) and then they vanish all at once.  What happens to the economy in a situation like this?

Lost is lost, my brother.  Whether lost due to operator error, negligence, incompetence, etc...if it's out of circulation and can't be retrieved, it'll be considered "lost".

If it's lost, see the answer again in blue above.

This hypothetical entity in possession of 5 million coins will either be Coinbase or Fort Knox I recon. I worry about Fort Knox for some reason.

Um, what's due time? well, if BTC ends up being a store of value type of thing, then stagnant coins don't really mean "lost" coin.
Rich people just park their money, they don't move it all the time.  we can't just assume it's lost just because it hasn't moved.

A company with so much coins must be insured, people get the fiat value for their lost coins and everybody else bitcoins become more valuable...

Bitcoin are lost in time and space. That is the truth. If I die right now my bitcoin would be NEVER available for anyone else. I think there are many people like me.

One of the leading bitcoiners has been quoted as saying that you could run the entire bitcoin ecosystem off of 1 bitcoin, if necessary. Losses of bitcoins are not a big deal (except to the one who lost them!)

This is a good reason to seriously think through how you secure your BTC, by the way. Housefires and city-wide floods and so on are a reality, especially over your lifespan. So if all your backups are in one location or nearby, a catastrophe to your house or your region could result in their loss. Think that through and balance it with the risk of theft to achieve balanced security of your BTC.

That is a very good point, pedrog!  There already is insurance for Bitcoin in 2015.

https://bitcoinmagazine.com/wp-content/uploads/2015/02/xlgroup.jpg

BitGo just launched with their insurance model.  I'm sure in 2050, there will be a plethora of options to insure that much coin in the future.

That would be crazy for anyone/company to have 5 million coins... just saying.  Even now in this tiny market that would be a large amount.

I am not so sure that insurance plan is so great. Soon we will have copy of our own corrupt financial system only in virtual world. And I thought that bitcoin was meant as remedy for bloated financial market on our real world...

But no one can force you to insure your bitcoins. It's a free market thing. If people find a given service of value they can use it. If you don't like it you can pass.

I think this is possibly an area of the Bitcoin machine that can be looked into: private key recovery/regeneration. Granted, it's going to require some heavy duty computer power, the fabled "quantum" PC, but math is math is math. Bitcoins can't be "lost" because they never existed physically in the first place. Therefore, even if the private keys are lost, the Bitcoins associated with those keys still exist and still contribute to the value of it all.

Bitcoin relies on the logic and truth of math. Start counting from 0 to 21 million. You can't just remove 0 through 10 and start counting from 11 and expect the whole thing to work. You would have to change the rules of math and everyone would have to start counting from 11. Then the whole system breaks.

With Bitcoin, there is no such thing as other's Bitcoin values increasing or decreasing (if some Bitcoins don't move or keys are lost) UNLESS more fiat money enters the ecosystem. The monetary value of Bitcoin is proportional to the fiat that entered or backs its economy.

Yes, quite a few companies already insured, Elliptic Vault, Coinbase, Xapo, BitGo, pretty sure in 2050 it will be ubiquitous.

I think I understand what you are trying to say, but it's misleading to tie the value of bitcoin solely to fiat currency. Suppose tomorrow euros, dollars, yen, renminbi and so on all went into hyperinflationary spirals and quickly went to zero value and out of circulation. People flocked to bitcoin and it becomes used to pay salaries and the whole range of financial services. In this case bitcoin would have value, and it would no longer be tied to fiat in any way. The more people transact directly for goods and services with bitcoin, the less its value is tied to fiat.

Bitcoin would just increase in value, the only people at lost are the ones who owned those Bitcoins.

You know this gets me thinking.

Ok so the original scenario is interesting enough, but here's another twist: Imagine that happens and the company says they lost their bitcoin. So the prices skyrockets and then the coins magically show up and are dumped into the market. Ut oh, the company lied and just ran off with some epic profits.

I would think a repeat of 2008 would happen if they dumped 5 billion coins...

I am not so sure about that anymore. I used to think that way to, that bitcoin will be only more expensive with time. But event of january 2015 when bitcoin dropped more than half of its initial value made me think that it may not be the case. There is always a risk. After all bitcoin is a FIAT.

I get what you're trying to say, Hazir, but please refrain from using Bitcoin in the same context as Fiat currency.

Fiat by definition is:



Bitcoin goes against all these institutions by definition, so it can and will never be Fiat based money.  No one government can control or "print" Bitcoin like the US dollar or Euro, so just trying to help you understand.

But I get what you were going for, deflationary economy yada yada...

But if 5 BILLION are destoryed i'm pretty sure the price would go, supply and demand 101.

This, people holding bitcoin would become even richer, thats all.

which is logical is that every coin would increase its value so that the market value of bitcoin is the same

I think it would be amazing  ;D ;D ;D

Just think suddenly people get interest in bitcoins, more and more joins...

BAM ... international currency... Public Leger...


It's be the best day ever,.... + should have enough bitcoins to say yay let's go..

Richer i hear that a lot on this forum rich this rich that lol You are kind of right it could potentially help the holders gain more paper money for there bitcoins but would not go as far as richer unless you have many coin and it rises a fairly nice amount.

I love god the thing is we cannot lose it unless the nibiru x inhabitants come to pay us a visit (shocked face)

That will surely result in price increase

well i think as the price changes with supply and demand if someday a large sum of bitcoin gets lost, the supply of bitcoin will be reduced so with the demand still the same, the price will go up.
in that case price of 1 satishi will increase so there is not only 20mil btc but you have to consider the decimal point too.

That's one of those reasons why bitcoin can't become a world currency  :(

Well, if we "replace" bitcoins from thin air, we would be no better than fiat. I would rather want to see a Satoshi being valued at $1 than seeing Bitcoins being replaced.  ;)

Bitcoins are modelled after "gold" ..... If it's lost, it's gone forever and it should not be replaced.

The Satoshi coins is a example of that ..... it's out there, but it's out of circulation..... When they are re-introduced, it would flood the market and the price will crash. {This will grant MANY people the opportunity to buy cheap coins}

Any introduction of manipulation, would defeat the original goal of the Bitcoin protocol.

No it wouldn't it would require Bitcoin users to lose 1% of of all Bitcoin annually for 100 years or even .1% of coins in 1000 years. I'm not saying it's gonna happen anytime soon, I'm saying EVENTUALY there is a time all coins would be lost. I said nothing about being concerned about it, I'm just stating a fact.

Eventually the sun is going to run out of hydrogen and engulf the majority solar system. This will happen first. So what do we do about this?

How do they decide and confirm that bitcoins have been lost? It can't be that if they lay dormant for too long, so how can it be confirmed?
Would the mining re-start or increase to previous levels in this case?

I had assumed, apparently incorrectly, that the rest of the coins would increase in value to compensate.

I hope that happens. In reality whatever I'm still holding on to will definitely increase in price as there is now lower supply in the market. I don't think we'll need to worry about that for the moment. Even if does become non-divisible in the future, there's a way for the network to compensate for it provided that the community agrees on a consensus whether to shift the decimal places or otherwise.

No my friend, you got this FIAT definition wrong in my opinion. I would say: yes, everything you said is right and it is a fact that bitcoin was not declared by any high power, or government or agency and that is true! But bitcoin is stil FIAT. Why? Because by itself it is worth 0. Yes! Bitcoin is useless, it is just some line of code in cyberspace and that means it is FIAT. Non fiat currency means that something is real and have value, like gold, diamonds, other precious metals. They can't be manufactured, and they are limited. Bitcoin is no different than any other paper money it is worth something only when people decide to purchase it. So do not be sicken by my theory that bitcoin is really not so different from normal FIAT currency.

Funny, to me this sounds like a real possibility... Large financial institution acquires enough coins (even less than 5 million will do) to be able to manipulate the market this way. I wouldn't be surprised if this was happening right now, the trap is being set.

1. The distribution of Bitcoins is actually getting better

2. The largest company losing Bitcoins would result in the price going down. Reduced supply doesn't increase demand, unless maybe if there's consensus on reducing the total number of Bitcoins. Do you buy an asset if the biggest investor is an idiot? No, you don't.

You're doing the math wrong. It's reasonable to assume some fraction of bitcoins will be lost each year. But it will be a fraction of the existing supply at that time, not a fraction of the original supply. In the 1% example, suppose a starting supply of 10,000,000 coins. The first year 100,000 are lost. Then the next year 99,000 are lost (1% of the remaining 9,900,000), and steadily diminishing from there.

Otherwise, after 99 years you would be supposing that only 100,000 bitcoins would be left.... and that they would somehow ALL be lost in 12 months. That doesn't make any kind of sense.

So we can keep losing coins perpetually, but with subdivision into sub-satoshi units of measure, bitcoin could keep going strong forever.

Bitcoin isn't FIAT period.  It cannot be printed at will by the Fed or the Eurozone.

You have read up more on what FIAT means, because FIAT is backed by Guns, Law, and higher central authority.

Bitcoin isn't backed by any of that.  It's backed by mathematics and deflationary economics.  It is a cryptocurrency after all.

It's almost impossible to tell if Bitcoins are lost, unless we never see those addresses transact on the Blockchain ever again.  If these Bitcoins are mined from say 2009 or so and never interact or transact on the ledger again after decades, then it's probably safe to say it's gone forever.

Reminds me of the time that poor guy lost 7500 BTC worth $7.5 Million a few years ago by dumping his PC hard drive in the trash:

http://readwrite.com/2014/01/13/what-happens-to-lost-bitcoins

Do we at least have hoverboards in every major city? Because frankly I don't want to live in any future without hoverboards.

Hoverboards and flying cars is what 2015 holds  ;)

As well as some dumb dumb losing 5million btc and helping the price rocket for all the holders so that is more good news if we are still alive of course.

Just have to make it till October and then we are living in a perfect future world, this summer is gonna be amazing!

It's year 2050?!? My Boss will be pissed I did not show up for work for 35 years..  :o

But then again, I have my bitcoins and the latest value is set to two oranges, which are scarce aroun 2050, the chance getting killed by a tiger are 200% higher then to find an orange, more due to the overpopulation of tigers after some investor with too many BTC on his hands wanted to breed and set free wild tigers as a hobby.

2050 is too far away for me to think about, too many variables and opporunities. Hope I'm still alive by then though :)

You must be a dad...

we move to another planet , just like steven hawkens said man!
bitcoin is the worry here , not the sun.
the guy's got a good point : )

and you must be a horrible horrible boss :l , give the man a rest man he has to take care of his kids

First of all, if Bitcoins exist that long, and there are only 20 million of them.  Bitcoins value would be insanely high.  Also, how on earth would people get paid everyday?  They wouldn't be able unless more coins were being generated.  It just isn't an idea that Bitcoins will ever be the world currency because the world currency would HAVE to have the ability to create more money when needed.

you surely mean fedecoins

The price per bitcoin goes up.

I'd hate to see a world with one currency...cause it means we're either under dictator rule or utopia and the former is a lot more likely.

Diversity is good for everyone.

Bitcoin would just become more divisible. A bitcoin in fifty years could theoretically be worth a million dollars, if it takes over as the leading world currency, and then a single satoshi (0.00000001 BTC) would be worth, I think, one cent.

Having regional currencies on a planet as small as Earth seems pretty archaic/tribal IMO. The currencies in Star Trek--which is only set a couple centuries or so from now--tend toward covering entire planets/species/interplanetary alliances/etc.

What do you mean how would people get paid?  With jobs.................. just like today...............

I don't think you understand the fallacies in today's current financial system.... you don't just print money if you need more......

Yes Bitcoin's value would be insanely high... that's why you can use it in fractions....

^^ i.e. there are different denominations each time you move over a decimal place. Most just say "bitcoin" for now, but some sites list it as "mBTC" by default.

In my spare time I've been working out some ideas on space colonization, from a planning methodology I think could be key to enabling a serious effort, to yet-another-crazy-idea for a low-cost launch technology, to a legal framework for space communities (orbital rights of way, responsibility for debris, etc.), government, finance, etc.

One thing I've realized is that while a single cryptocurrency would work between space colonies in a given planetary system, they would not work between communities across the solar system due to the time lag. So while earth-moon system colonies might share bitcoin with earth inhabitants, colonies around Jupiter would need to rely on an altcoin for day-to-day transactions. (They could still tie into bitcoin, but it would be like mailing a check as opposed to near-instant transfers.) Oh, and crypto would be ideal for space colonies. (If they can't maintain their electronics capabilities - see below.)

(Off-topic aside: One thing I've realized that doesn't seem to be generally appreciated is that if launch costs remain high, it inexorably follows that the first generation of space immigrants will be heavily focused on bootstrapping up their manufacturing capablities in space. They will lack specialized manufacturing capabilities apart from essentials, and those will be simply made. Thus, for example, they will be wearing cotton or synthetic "homespun" clothing, have a serious lack of personal computers/electronics that we take for granted (excepting mission-critical technology), household goods will be crudely and simply made from a limited range of raw materials, etc. And don't even get me started about the toilet paper. They will work their butts off trying to improve their difficult situation.

It will be more "Amish in space" than the shiny-clothing hypertech societies that films and SF books depict, until a sizable population with diversified raw material inputs and manufacturing capabilities develops. Or someone figures out how to lift cargo into orbit cheaply.)

I understand what you are getting at, but if we had a fixed dollar amount(say 2million) and no money was ever printed again, you don't see problems in that?  Eventually people would not have anything and the rich would have everything.  It just wouldn't work if you had a fixed amount of money

20 million coins would just not be enough to support the whole worlds needs..

You don't have to view it as 20 million coins. It's just computer code. Move over a decimal place or ten and give it a different name.
It's capped but there will always be enough BTC to go around.

Well what if someone or a group invented a way to recover it? Like brute-force or something? We can assume that by the year 2050, someone or something will manage to break at least the tip of such and indecipherable code today. When that happens, an individual or a group has the potential to control all the existing coins in the circulation because they have the power to crack private keys.

Wait, am I drunk or something?

Why not?  20 million coins divisible by 8 zeroes is pretty much infinite amounts.

That's the whole genius of Bitcoin, it's based on math and can scale to whatever you need.  If Bitcoin goes to where we all need it, you won't need to carry around more than a few millibits in your mobile wallet.

You don't see people carrying around gold bricks or huge diamonds the size of their fists for spending money, do you?

http://i.dailymail.co.uk/i/pix/2013/07/30/article-2381518-1B11E5F4000005DC-56_306x535.jpg

Haha +1 for the picture!

True. Bitcoin is cleverly designed due to its divisibility. It suits everyone's needs and it stretches out the coins in circulation by means of fractions of a whole.

But still +1 for the picture. ;D

Not true at all, the rich benefit of the creation of new money because they are connected to the fed and they grab their share first.
Inflation allows useless spending that costs poor greatly.

Sure it is, say the rich got paid 10BTC a year.  Well, they invest into stuff and turn that into 100BTC.  Say now 100 of them did that.  We are quickly getting rid of Bitcoins.  I just don't see a world where there is a set cap to something and no way of actually producing more money to use.

nice post but i doubt this will ever happen .. there will need to be massive social and economic upheaval for bitcoin to replace centralized currencies; the Powers That Be have vested interests in printing money!

The mankind in the fullness of time  will have to adopt a universal currency if we are going to carry out serious commerce in space. It's only a matter of time before people will be asking for intergalactic monies for their two weeks in a space hotel. Check QUID http://www.space.com/4454-scientists-design-space-currency.html

At 1 million dollars per Bitcoin, 5 million would be $5000000000000.. That would be a huggee price increase here, one satoshi would be worth more then one cent..

Incredible that this website has some many people and attention and traffic and yet, most people still don't understand how bitcoin works.

Why does anyone even take this forum serious is beyond me... maybe people should try to read up and understand something about the project they are partaking in?

What will happen then is the value will go higher and higher to compensate for demand. What is 5 cents now could be worth $5 or higher. If you think about it, if the world over time, moved to Bitcoin as a unified currency, there would need to be a massive value increase for over 7 Billion people to be able to use. That would make even 0.000001BTC valuable in today's terms :)

Supply and demand 101, inflation would rage and the price would catapult higher.

I highly doubt that will happen. I think Bitcoin will become a world Currency but the price wouldn't rage higher to be honest.

The market cap of bitcoin is less than $4 Billion. If it becomes the world's reserve currency that will not be sufficient for a large city, much less the world.

6 years dude, Bitcoin has more VC investment capital and development than the Internet had in the early 90's...