Lost Bitcoin and possible future scarcity

[Felicity_Tide]

Bitcoin is a decentralized network and also a digital currency that uses a peer-to-peer system to process and verify transactions. These transactions are recorded on a public ledger, also called the Blockchain.

The standard for owning Bitcoin is by having a wallet (ideally a non-custodial wallet), which contains: a private key that gives full control of the coins, and also a public address (wallet address) that allows individuals to receive and verify transactions on the Blockchain.

As designed in the Bitcoin protocol, there can be only 21 million BTC in circulation, even though other enthusiasts might think otherwise due to proven calculations and reasons not to estimate.

The concept of Bitcoin scarcity is strongly tied to halving events where rewards of miners are reduced, thereby decreasing the amount of Bitcoin entering circulation. In more detail, the total supply (21 million) remains constant, while circulating supply keeps increasing as long as mining continues, but the amount entering circulation is reduced by halving, thereby leading to more demand.

In addition to scarcity, Lost Bitcoins happens to be a significant contributor. Dormant wallets, also known as hibernated wallets, are considered to house lost Bitcoins. Identifying the total number of lost bitcoins can be very challenging or even impossible due to the fact that there are several inactive wallets connected to the Blockchain, making it impossible to tell who is holding and who has lost.

For example, Satoshi Nakamoto happens to mine the first block. The Genesis address created holds about 99.85 BTC and is currently a dormant wallet. There are also speculations that Satoshi might have thousands of dormant wallets as they were used to receive block rewards. By subtracting the amount of Lost Bitcoin from 21 million, it is likely that we are left with an amount lesser than the total supply when unlocked.

There are hundreds, if not thousands, of dormant wallets that house Bitcoin of different amounts. When we calculate all together, we realize that we are short of the total supply, which I think would trigger scarcity as more people would want to hold the ones available.

Discussion Questions

• Do you think all dormant wallet (long inactive wallets) are gone forever?
• As we are not certain of Satoshi's return, should we be bothered about his dormant wallets?
• do you think lost Bitcoin can cause Bitcoin scarcity in the future?
• From a total of 21million total supply, can you attempt a prediction guess of the total number of Bitcoin that would be in active wallets after all Bitcoin has been mined?

In addition, here are ...
Possible Causes of Lost Bitcoin

• Death of the holder
• Transferring to the wrong network or address (though some wallet software can detect this and notify the sender before the button is hit)
• Inability to remember memorized or find written seed phrases
• Wallet compromise such as phishing hacks, etc.

Preventive Measures

• The use of private hardware wallets (cold wallets) is strongly encouraged.
• Seed phrases should never be memorized, nor written on a mobile device or computer. They can be written on paper or in a book that shouldn't be visible to external members and should be strongly protected.
• Having a backup of your documented seed phrase is crucial in case of unplanned circumstances like a fire outbreak.

Genesis block - https://www.blockchain.com/explorer/addresses/btc/1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa

[stompix]

There are hundreds, if not thousands, of dormant wallets that house Bitcoin of different amounts. When we calculate all together, we realize that we are short of the total supply, which I think would trigger scarcity as more people would want to hold the ones available.

Yup, that's the whole idea and the appeal of Bitcoin, lost coins are lost, we don't print more to have a constant supply, and nobody but the free market cares if some coins are truly lost or are just asleep in someone's wallet.

Discussion Questions

• Do you think all dormant wallet (long inactive wallets) are gone forever?
• As we are not certain of Satoshi's return, should we be bothered about his dormant wallets?
• do you think lost Bitcoin can cause Bitcoin scarcity in the future?
• From a total of 21million total supply, can you attempt a prediction guess of the total number of Bitcoin that would be in active wallets after all Bitcoin has been mined?

Apart from number 3 which is clearly a yes since, well, that's how things work, for all the rest nobody would know the answer, maybe Satoshi himself on the second but for anyone else is just crystal globe territory.
But most important, lost coins don't pose a problem, will not pose a problem in the future and if someone thinks oh no we will only have 1 million Bitcoins in 2100, it's not like,  that we will still have 100 trillion satoshis.

[Medusah]

The Genesis address created holds about 99.85 BTC and is currently a dormant wallet.

The genesis address holds 50 bitcoins less than that, because the genesis block reward is unspendable. 

There are also speculations that Satoshi might have thousands of dormant wallets as they were used to receive block rewards.

Satoshi definitely mined lots of the first blocks, and since these coins remain untouched, if he is alive and possesses the keys, it's plausible that he could own thousands, or even millions, of coins. 

From a total of 21million total supply, can you attempt a prediction guess of the total number of Bitcoin that would be in active wallets after all Bitcoin has been mined?

There are a few thousand provably lost coins, but beyond that, our knowledge is limited.  Speculating about lost coins doesn't seem valuable given the high level of uncertainty surrounding our conclusions.  I hope this addresses all of your concerns.  There isn't anything more to say. 

[AprilioMP]

Answers to discussion questions.

• I do not really know whether it is lost forever because it is still possible that the owner of the wallet who is inactive due to the death of the owner has submitted or inherited a private key or seed phrase to other parties who are trusted.
• I don't feel disturbed.
• Can be a cause of scarcity based on the amount of Bitcoin 21 million BTC.
• No.

In the precautionary measures of the loss of Bitcoin, all of these points I agree and I think whoever the owner of Bitcoin is currently stored in a special wallet, it is necessary to pass on people who can believe like wives/husbands to be used properly as assets. The act of passing down needs to be done on an ongoing basis until the child for his future.

I never knew how other people did it, but in my opinion bequeathed Bitcoin the actions that I would take if I had large amounts of bitcoin.

[dothebeats]

Since these questions were already asked before, I'll just say most of the common answers other members have given over time.

The number of bitcoins in dormant addresses are considered as dormant because we don't have a way to know for certain if the keys are lost or not. Even today, most of the figures you might read on the internet regarding these 'lost coins' are guesstimates wherein they get the number of bitcoins sitting on wallets for a certain period of time.

Even if you come up with a sensible equation or analysis to get an exact number of coins that would no longer be in circulation ever, it will never be correct as there had been some cases wherein dormant coins were transferred to another wallet after 10 years or more.

[mk4]

• Do you think all dormant wallet (long inactive wallets) are gone forever?

Of course not. There have been wallets that's been around for a decade then suddenly became active.

• As we are not certain of Satoshi's return, should we be bothered about his dormant wallets?

No. Because it's his money. He should do whatever he wants with it.

• do you think lost Bitcoin can cause Bitcoin scarcity in the future?

Even dormant wallets already sort of provide some 'scarcity' due to the fact that they're off the markets.

• From a total of 21million total supply, can you attempt a prediction guess of the total number of Bitcoin that would be in active wallets after all Bitcoin has been mined?

Around 500k lost probably. Just a random guess.

[Cricktor]

The standard for owning Bitcoin is by having a wallet (ideally a non-custodial wallet), which contains: a private key that gives full control of the coins, and also a public address (wallet address) that allows individuals to receive and verify transactions on the Blockchain.

A Bitcoin wallet usually contains a lot of private keys, from which associated public keys and public addresses are derived by known cryptographic recipies. But yes, normally you need to have the private key to move coins in the blockchain. The blockchain itself doesn't know or use public addresses, those are only recipies for how to construct so-called unlock scripts for coins.

As designed in the Bitcoin protocol, there can be only 21 million BTC in circulation, even though other enthusiasts might think otherwise due to proven calculations and reasons not to estimate.

By design there can be only 20,999,999.9769BTC, of which some are provably lost or unspendable (as already said e.g. the Genesis block coinbase subsidy of 50BTC is unspendable, even if you had the private key; there are few examples of miners who didn't claim the total allowed block subsidy and transaction fees, those unclaimed coins are forever lost, too; any coins sent to OP_RETURN outputs are burned and lost; ...).

Dormant wallets, also known as hibernated wallets, are considered to house lost Bitcoins. Identifying the total number of lost bitcoins can be very challenging or even impossible due to the fact that there are several inactive wallets connected to the Blockchain, making it impossible to tell who is holding and who has lost.

Why those should be considered lost coins? Elaborate, please!

There might be a likelyhood that early coins are lost coins because wallets were deleted when Bitcoin didn't yet had a accepted value. But we can't know if those are really lost.

For example, Satoshi Nakamoto happens to mine the first block. The Genesis address created holds about 99.85 BTC and is currently a dormant wallet. There are also speculations that Satoshi might have thousands of dormant wallets as they were used to receive block rewards. By subtracting the amount of Lost Bitcoin from 21 million, it is likely that we are left with an amount lesser than the total supply when unlocked.

With 100% certainty blocks 0 (Genesis) and block 9 can be attributed to Satoshi Nakamoto (Satoshi sent some coins from coinbase of block 9 to Hal Finney and this is well documented).

See http://satoshiblocks.info/, there's some scientific evidence that Satoshi mined around 21954ish blocks (this yields ~1.1million BTC). Every of those coinbase outputs were mined to a public key, never to a public address!

This bitcoinexplorer.org lists blocks with a miner attribution.

There are hundreds, if not thousands, of dormant wallets that house Bitcoin of different amounts. When we calculate all together, we realize that we are short of the total supply, which I think would trigger scarcity as more people would want to hold the ones available.

Why are you so concerned about dormant wallets exactly? We can't really calculate them all together, except maybe that you could put them into buckets of unspent age. But that doesn't give you any certainty if those are only dormant or provably lost. What's the fuss about them anyway?


I added my answers in color.

Discussion Questions

• Do you think all dormant wallet (long inactive wallets) are gone forever?
  No, but some may be. We can't know.
• As we are not certain of Satoshi's return, should we be bothered about his dormant wallets?
  Not at all.
• do you think lost Bitcoin can cause Bitcoin scarcity in the future?
  Provably lost ones, yes. But Bitcoin is already of finite scarcity, who cares if more or less?
• From a total of 21million total supply, can you attempt a prediction guess of the total number of Bitcoin that would be in active wallets after all Bitcoin has been mined?
  No, likely impossible. The only certainty is: the pile of lost coins only grows, never shrinks.

[CryptoHeadlineNews]

.
For example, Satoshi Nakamoto happens to mine the first block. The Genesis address created holds about 99.85 BTC and is currently a dormant wallet. There are also speculations that Satoshi might have thousands of dormant wallets as they were used to receive block rewards. By subtracting the amount of Lost Bitcoin from 21 million, it is likely that we are left with an amount lesser than the total supply when unlocked.

According to speculation, we are made to believe that Satoshi owns over 1 million Bitcoin, whereas according to the real time value of the total circulating supply of BTC at the time of writing this post is said to be 19,696,950 BTC,  which means if we are to subtract Satoshi's acclaimed 1 million BTC, what will be left for both lost+unlost BTC currently in circulation will be 18,696,950 BTC.

 
Credit:www.visualcapitalist.com

However, according to data about the top holders of Bitcoin, I'm made to understand that;
1. Microstrategy  174,530 Btc
2. Galaxy                17,518  Btc
3. Marathon            13,716 Btc
4. Tesla                    10,500 Btc
5. HUT8                     9,366 Btc
6. Coinbase               9,181 Btc
7. BLOCK                   8,027 Btc
8. RIOT                       7,327 Btc
9. HIVE                       2,596 Btc
10. Clean Spark        2,575 Btc
11. NEXON                1,717 Btc
12. EXODUS              1,651 Btc

Of which if you are to sum up all the Bitcoins been held by worlds top corporate holders, it gives us only 258,704 BTC. Whereas, If you are to subtract both Satoshi's acclaimed amount of 1million and the one been held by these top corporate holders, you will be left with  18,438,246 BTC (i.e both lost and unlost).

[Dunamisx]

Discussion Questions

• Do you think all dormant wallet (long inactive wallets) are gone forever?

The question or challenges here is on how to identify the difference between a lost wallet and the one which is inactive, the issue is on how to know or differentiate between the two of them, how can we know if someone holding for a long time is still in charge of his wallet or not.

• As we are not certain of Satoshi's return, should we be bothered about his dormant wallets?

How does the two correlate, we don't care about Satoshi nor his wallet, if at all he has been dead, then he's very smart enough to leave the access to those coins with his family or children, but we are not having a clear evidence on his whereabouts.[/list]

[alastantiger]

Answers to discussion questions.

• I do not really know whether it is lost forever because it is still possible that the owner of the wallet who is inactive due to the death of the owner has submitted or inherited a private key or seed phrase to other parties who are trusted.

It is likely that if upon the death of the owner, there was no hand over of seed phrase, then it is lost forever. I remember the guy who lost his drive where he had his bitcoin wallet in a dump. He's been looking for it for years and cannot find it. It could also be considered lost forever.

• As we are not certain of Satoshi's return, should we be bothered about his dormant wallets?

We shouldn't major in minor things so it is said. I know Satoshi's dormant wallet entering into the market will be a major thing but for now I cannot be bothered about his dormant account.[/list]

[Stalker22]

• Do you think all dormant wallet (long inactive wallets) are gone forever?

Of course not. It would be foolish to think that way.

• As we are not certain of Satoshi's return, should we be bothered about his dormant wallets?

I see no reason why.

• do you think lost Bitcoin can cause Bitcoin scarcity in the future?

Thats kind of obvious.  If there is less of something, of course that means it is scarcer.

• From a total of 21million total supply, can you attempt a prediction guess of the total number of Bitcoin that would be in active wallets after all Bitcoin has been mined?

You mean in 100 or so years? Well, thats a long way off.  Human civilization itself might be a whole different story by then.  Predicting something so specific is impossible.

[Not in Town]

People die and bitcoin gets scarcer.

[bluebit25]

Discussion Questions

• Do you think all dormant wallet (long inactive wallets) are gone forever?
• As we are not certain of Satoshi's return, should we be bothered about his dormant wallets?
• do you think lost Bitcoin can cause Bitcoin scarcity in the future?
• From a total of 21million total supply, can you attempt a prediction guess of the total number of Bitcoin that would be in active wallets after all Bitcoin has been mined?

There is an influence but not a cause that makes us afraid of the development of bitcoin, because in the journey of bitcoin's development to the present, there are sometimes stories of early wallets going back to the past- there are many reasons for that.

And we should also consider the fact that the number of active bitcoins accounts for the majority, so there is no need to panic/panic is what people choose. I also find this as humorous as the way we talk about the tragedy of WW3+, solar storms, quantum computers,... and there are tons of reasons why others question it, but back to the reality is that we need to own bitcoin before a bad situation arises to feel how it affects us.

[_BlackStar]

Discussion Questions

• Do you think all dormant wallet (long inactive wallets) are gone forever?
• As we are not certain of Satoshi's return, should we be bothered about his dormant wallets?
• do you think lost Bitcoin can cause Bitcoin scarcity in the future?
• From a total of 21million total supply, can you attempt a prediction guess of the total number of Bitcoin that would be in active wallets after all Bitcoin has been mined?

I wanted to answer some of your questions briefly - but I'm sure you probably already know what the answers to your questions are.

• As long as you still hold the key, seed or whatever allows you to access your wallet at any time - then your bitcoin will not be lost.
• It's normal to fear a big drop due to a massive sale of from address containing thousands of bitcoins - but you should already have a plan for when to cash out your investment in bitcoin.
• Yes - that's clear.
• I don't know - if you have a crystal ball, try to predict it yourself.  

[serjent05]

• Do you think all dormant wallet (long inactive wallets) are gone forever?

No, there are instances that wallets that were inactive for more than 10 years suddenly become active just like what is written on this link: https://www.binance.com/en/square/post/7744610888034.

Another thing, just like earlier stated, we have no way of determining whether an idle wallet is just dormant or it was already a lost wallet

• As we are not certain of Satoshi's return, should we be bothered about his dormant wallets?

I don't since I respect the right of a person over his property, I do not know about you though...

• do you think lost Bitcoin can cause Bitcoin scarcity in the future?

Obviously, simply by knowing the law of supply and demand, once the supply is cut there is always a scarcity in the market especially when the demand keeps on pouring in.

• From a total of 21million total supply, can you attempt a prediction guess of the total number of Bitcoin that would be in active wallets after all Bitcoin has been mined?

It is easy to predict, let alone attempt since we can just utter some random numbers and the prediction is done.  Take note, predictions do not need to be precise and correct so anyone can predict any numbers and not have to worry if they will realize or not.  But if you are talking about precisely predict or estimate the number then by all means it is a no.

[hatshepsut93]

Discussion Questions

• Do you think all dormant wallet (long inactive wallets) are gone forever?
• do you think lost Bitcoin can cause Bitcoin scarcity in the future?
• From a total of 21million total supply, can you attempt a prediction guess of the total number of Bitcoin that would be in active wallets after all Bitcoin has been mined?

No I don't think that all inactive coins are lost, from time to time an address that wasn't used 10+ years suddenl activates. This doesn't even mean that someone is not selling coins for 10+ years - a user can have many addresses and they might have done a lot of sales in the past too.

If by scarcity you mean shortage then no, it won't cause such problems because there's enough units of account on the network.

What do you mean by "active wallets"? Coins that are moved frequently? Or coins that the owner has access too?

[Rruchi man]

• do you think lost Bitcoin can cause Bitcoin scarcity in the future?

The halving and loss of bitcoins are almost similar.

Just the halving tends to increase the value of bitcoins by reducing the number, scarcity due to loss of bitcoins also reduces  the number of bitcoins available too, and as usual, a reduction in the available bitcoins will greatly affect positively the value of bitcoins available

[peter0425]

Discussion Questions

• Do you think all dormant wallet (long inactive wallets) are gone forever?

It depends let me use volcanoes as an analogy. Some volcanoes can be inactive for a while but then show signs of acitivity later on. With wallets, we do not know what the owner is doing or whether they are even alive so it’s difficult to say

• As we are not certain of Satoshi's return, should we be bothered about his dormant wallets?

Why? I don’t think it’ll be a problem.

• do you think lost Bitcoin can cause Bitcoin scarcity in the future?

Yes and that will drive up the price even more.

• From a total of 21million total supply, can you attempt a prediction guess of the total number of Bitcoin that would be in active wallets after all Bitcoin has been mined?

No as a lot of factors would play in the adoption of bitcoin. Many will hold many will forget their wallets and so on and so forth.
[/quote]

[pinggoki]

There's no certain way to determine if those lost bitcoins are lost or not because the logical way to look at things with this one is that we should know that or that there's a confirmation that it's really lost, the only certain amount of bitcoin that we've lost right now are those bitcoins that went to the burn addresses, those are for sure not going to be back in the circulation anytime soon. In regards to scarcity, probably the only thing that we can do about it is if we just don't think about it and just accumulate and hodl as much bitcoin as we can afford to do, we would eventually not worry about scarcity because when that happens and the prices goes up in an exponential amount, you would get the most benefit out of it. And if you did bought a huge amount of bitcoin through the consistent DCA through the years, you would be fine that you don't mind not getting back into bitcoin because of the profit.

[OcTradism]

How many bitcoins are lost?
Lost Bitcoin: 3.7 million Bitcoin are probably gone forever
What happens to lost bitcoins?

People have estimations on lost bitcoins that is about 3 - 4 million bitcoins but let's see
Old Bitcoin wallets keep waking up: How many of the 1.8 million ‘lost’ coins are really gone?

I don't mind how many bitcoins lost in accurate number because I know we never knows that number, but I know I received donation from people lost their bitcoins.

Lost coins only make everyone else's coins worth slightly more.  Think of it as a donation to everyone.