About 20% of all Bitcoin are owned by dead people or are unrecoverable.

[mak013]

Saw this on a reply to a thread on another forum, I don't know how true it is, and I wasn't sure the exact feeling or reaction I should have towards it, but it made me wonder how dangerously 'immutable and self-custodian' btc is.

These coins are probably locked in wallets whose keys are forgotten, destroyed, or owned by people who have passed away. That’s about 3.7 to 4 million BTC, even higher than the amount in Satoshi's wallet. This definitely impacts on the circulating supply of btc and reducing it far below the 21 million hard cap.

While it sound tragic, I think it is actually bullish for Bitcoin’s price or maybe not, not really sure!!!. But what I think is that those coins acts like a permanent burn, thus helps increase scarcity and making btc even more valuable.

I would like to know if folks here think this statistics is actually correct and pros and cons if true

Compare it with the gold. Lots of gold was lost in the oceans. Lots of treasures were hidden with dead people. You can get new gold or try to find the lost. Same with BTC. You can mine it or try to hack these wallets.
If someone get it today - it can seriously decrease BTC price. But for a long distance nothing change - the price would grow up again.

[BitHodlers]

A couple of things regarding this "concern":

• We have no clue how many people self-custody bitcoin, and thus, absolutely no idea how many of them are dead.
• Even if we did know how many people own bitcoin, there's still no reputable estimation on how many bitcoin they own.
• Even if 90% of the supply was unrecoverable, it'd change nothing about the underlying economics and its functionality as peer-to-peer cash.

So don't worry.

These threads come and go but they are not useful at all. These estimations are based on flawed assumptions. We can't be sure at all and even if there are cases where someone claims that the coins are lost it is still not proof that it is so. As regards to your claim regarding the supply, even if it was 99% it would not change anything about Bitcoin. I guess most people who open these threads must not understand that.

Here is an estimated allocation for a total supply of 21 million Bitcoins, with 17.6% of Bitcoins being lost forever. Now the question is, if Satoshi is alive, his Bitcoins will have to be kept separately, but if he is dead, his Bitcoins will be directly added to the lost Bitcoins. If the total Bitcoin in Satoshi's wallet is 5.2% and all the Bitcoins lost combined are 17.6%, then the loss becomes approximately 22.8%. So the total remaining Bitcoin is 87.2% of the total supply, meaning that excluding the lost Bitcoins, the total supply of Bitcoins stands at 18.312 million.

As I said, these are estimates that are based on many assumptions. The reality of the matter is that nobody can objectively know whether coins are lost or not in most cases except the owner. And the owner has no objective means of proving that coins are lost to others. It is based only on trust of their words, trust which Bitcoin was designed to eliminate. Don't believe these stories too much and don't overestimate the significance of this.

[LDL]

As I said, these are estimates that are based on many assumptions. The reality of the matter is that nobody can objectively know whether coins are lost or not in most cases except the owner. And the owner has no objective means of proving that coins are lost to others. It is based only on trust of their words, trust which Bitcoin was designed to eliminate. Don't believe these stories too much and don't overestimate the significance of this.

Yes, it is true that this is actually a hypothetical statistic where no one can accurately represent which wallets are alive and which are dead. Accounts from the Satoshi era that have been declared dead are still active and occasionally trade tokens. So it is not realistic to declare Satoshi era accounts, especially those that have been inactive for a long time, as those wallets can become active at any time. So no matter how much we represent the number of lost Bitcoins, it is never possible to determine the exact number.

[Ucy]

You shouldn't trust or believe that information unless it's proven.
By the way, bitcoins remaining permanently in user's account has nothing to do with immutability...That should be the inability of another user to access the bitcoins without the owner's keys unlike how bank workers or centralized exchanges could access people's funds with or without their access keys or login info if they want to. While immutability is about preventing changes to a data or information even by the one who controls it.


It's the responsibility of a Bitcoin holder to ensure his/her coins get to another person such as a relative, after death.  Even in physical world, money or precious metal maybe lost forever if the owners did not reveal where they were stored to relatives before death.

And already existing feature like timelock could be used to transfer access of bitcoins to others after the death of their owners. We can also implement more of such features on Bitcoin, or develop ours, or use Bitcoin inheritance services

[The Cryptovator]

I think OP read the data from bitesizebitcoin; according to them, 20% of Bitcoin is unrecoverable.

However, according to Ledger analysts, it's approximately 11–18%, so we can assume it's 20% as well. I can't find any exact data from the trusted sources. Personally I don't expect to lose Bitcoin forever that is unrecoverable either for me or any other Bitcoin holders. But if accidentally lost, then it should consider rewards for whole Bitcoin holders. Because lost Bitcoin is reduced from the circulation supply and from the total supply as well since it will never be covered.

We can die anytime; anyone can't be assured to live for a second. So we must have to think about our holding. It must be used by our next generation; otherwise, it will be gone forever. At least one of the family members should know you are using crypto and should be trained very well on how to recover it after you pass away. But definitely you have to secure your wallet seed on your way. Not share with him, just save in a safe place, but it should be findable after passing away.

[zabzob]

With all that said, your conclusion is correct though. Any coins lost is contributing to the scarcity of bitcoin, which makes the rest that much more valuable.

This brings in mind the topic of quantum computers speculated to be built with a powerful tech that it can brute force into bitcoin wallets. Besides what I was thinking that it could serve as a threat to bitcoin holders being vulnerable of losing their coins with the existence of such tool assuming this was feasible. But on the other hand I want to know, if the machine being put into good use in recovery of lost bitcoins, wouldn't it help slowdown  that bitcoin scarcity we're looking forward in future?

Because for me, I think it's better we have access to all 21 millions bitcoin because even as that there's still going to be a scarcity in the distant future considering the total world population to the total cap supply of bitcoin.

Maybe in 50 or 100 years quantum computing becomes capable of brute-forcing legacy keys (today's keys) that were never traded in for newly developed quantum-proof keys. So current (alive) bitcoin owners at that time will be secure from quantum hacks, but all the coins owned by dead people will be recovered. This could cause a massive drop in price, as 20% (or by then, 50% or more) of existing bitcoins thought lost forever are suddenly dumped on markets.

[Woodie]

It's very much posible and the fact that some sections of society have trust issue's with their partners to the point of them  decideing to keep their crypto investments to themselves(secret) even when they know that without that key those coins are lost forever unless some easy to crack password was used then they can get to them, otherwise move on those coins are gone.

And I suspect the bigger chunk could have come from the first generation of Holders that bought bitcoins at the price of peanut's.

[coolcoinz]

Nobody can know exactly how much is lost. The stats different sites will give you depend on their criteria for lost coins. Some will for instance say that coins that don't move for over 5 years must be lost, but I own cons that haven't moved since 2018, so those must be lost according to them, right?

We can safely assume that coins that haven't moved for 10 years are lost. Even if some of it can be recovered and actually go back to circulation it's going to be a very small number. IMO it's less than 20%, but we'll eventually get there since coins are being lost every day.

[Patikno]

These coins are probably locked in wallets whose keys are forgotten, destroyed, or owned by people who have passed away. That’s about 3.7 to 4 million BTC, even higher than the amount in Satoshi's wallet. This definitely impacts on the circulating supply of btc and reducing it far below the 21 million hard cap.

It would be difficult to confirm the truth, as many addresses are difficult to identify the owner, and whether they are still alive or not. Even if someone conducted in-depth research involving on-chain activity, it would still be difficult to prove it definitively, and they might only get guesswork (possibly temporary), and it is possible that the wallet might become active again after a long period of inactivity.

Saw this on a reply to a thread on another forum, I don't know how true it is, and I wasn't sure the exact feeling or reaction I should have towards it, but it made me wonder how dangerously 'immutable and self-custodian' btc is.

Self-custody isn't inherently dangerous, as long as someone can secure their wallet, perform a series of secure backups, avoid careless actions, or bequeath their wallet to people they trust (meaning inheritances that have conditions upon the owner death). So, I think these methods are solutions to the possibilities that could arise when someone practices self-custody. Essentially, we must consider all possible outcomes to avoid unwanted consequences, especially after we are gone. By the way, we also need to know, or discuss such matters as valuable lessons for ourselves, because learning from the experiences of others is a wise practice.

[Alphakilo]

These coins are probably locked in wallets whose keys are forgotten, destroyed, or owned by people who have passed away. That’s about 3.7 to 4 million BTC, even higher than the amount in Satoshi's wallet. This definitely impacts on the circulating supply of btc and reducing it far below the 21 million hard cap.

It would be difficult to confirm the truth, as many addresses are difficult to identify the owner, and whether they are still alive or not. Even if someone conducted in-depth research involving on-chain activity, it would still be difficult to prove it definitively, and they might only get guesswork (possibly temporary), and it is possible that the wallet might become active again after a long period of inactivity.

Saw this on a reply to a thread on another forum, I don't know how true it is, and I wasn't sure the exact feeling or reaction I should have towards it, but it made me wonder how dangerously 'immutable and self-custodian' btc is.

Self-custody isn't inherently dangerous, as long as someone can secure their wallet, perform a series of secure backups, avoid careless actions, or bequeath their wallet to people they trust (meaning inheritances that have conditions upon the owner death). So, I think these methods are solutions to the possibilities that could arise when someone practices self-custody. Essentially, we must consider all possible outcomes to avoid unwanted consequences, especially after we are gone. By the way, we also need to know, or discuss such matters as valuable lessons for ourselves, because learning from the experiences of others is a wise practice.

The Bitcoin that is lost to missing or misplaced private keys, dormant or deceased person wallets and even Satoshi's lost coins make up for this amount according to expert analysis and one revelation is that they are still visible on the blockchain, but they are sometimes efficiently removed from the circulating supply for clarity.

Those lost coins also do more to make the supply of Bitcoin scarce seeing that there is only 21 million of the total expected value of supply by 2140 to be mined.

I don't think those that are confiscated or seized by the government for fraud or money laundering concerns are among this 20% so mentioned because they all make up the Bitcoin reserve banks in a country like the U.S and it isn't an unrecoverable asset by the government.
 
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[Fara Chan]

Maybe in 50 or 100 years quantum computing becomes capable of brute-forcing legacy keys (today's keys) that were never traded in for newly developed quantum-proof keys. So current (alive) bitcoin owners at that time will be secure from quantum hacks, but all the coins owned by dead people will be recovered. This could cause a massive drop in price, as 20% (or by then, 50% or more) of existing bitcoins thought lost forever are suddenly dumped on markets.

A Bitcoin price drop resulting from the sale of recoverable Bitcoins, as you describe, is indeed a very plausible occurrence, as Bitcoin is still experiencing price drops, not to mention the fact that Bitcoin has already been successfully recovered. Therefore, this is a common occurrence that Bitcoin holders need not fear, as Bitcoin can eventually rebound after the price drop is over. And if this were to actually happen to Bitcoin, it could be quite an interesting story in Bitcoin history and among Bitcoin holders, especially those who are able to recover Bitcoins from the wallets of deceased individuals.