It's year 2050 and Bitcoin is the world currency...

[Herbert2020]

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?

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.

[kitarohotono]

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?

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

[Kprawn]

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.

[nextgencoin]

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

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.

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. 

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.

[gadman2]

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?

[NUFCrichard]

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

But if no more coins are generated, what happens when Bitcoins are lost? Won't that be a problem?
Because of the law of supply and demand, when fewer bitcoins are available the ones that are left will be in higher demand, and therefore will have a higher value. So, as Bitcoins are lost, the remaining bitcoins will eventually increase in value to compensate. As the value of a bitcoin increases, the number of bitcoins required to purchase an item decreases. This is a deflationary economic model. As the average transaction size reduces, transactions will probably be denominated in sub-units of a bitcoin such as millibitcoins ("Millies") or microbitcoins ("Mikes").

The Bitcoin protocol uses a base unit of one hundred-millionth of a Bitcoin ("a Satoshi"), but unused bits are available in the protocol fields that could be used to denote even smaller subdivisions.

That should answer your question.

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.

[Q7]

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.

[Hazir]

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

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:

Any money declared by a government to be legal tender.
State-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard.
Intrinsically valueless money used as money because of government decree.

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...

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.

[vm_mpn]

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.

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.

[chmod755]

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.

[ebliever]

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.

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.

[ChuckBuck]

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

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:

Any money declared by a government to be legal tender.
State-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard.
Intrinsically valueless money used as money because of government decree.

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...

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.

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.

[ChuckBuck]

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

But if no more coins are generated, what happens when Bitcoins are lost? Won't that be a problem?
Because of the law of supply and demand, when fewer bitcoins are available the ones that are left will be in higher demand, and therefore will have a higher value. So, as Bitcoins are lost, the remaining bitcoins will eventually increase in value to compensate. As the value of a bitcoin increases, the number of bitcoins required to purchase an item decreases. This is a deflationary economic model. As the average transaction size reduces, transactions will probably be denominated in sub-units of a bitcoin such as millibitcoins ("Millies") or microbitcoins ("Mikes").

The Bitcoin protocol uses a base unit of one hundred-millionth of a Bitcoin ("a Satoshi"), but unused bits are available in the protocol fields that could be used to denote even smaller subdivisions.

That should answer your question.

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.

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

[Beliathon]

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

[M28MmickT]

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.

[Btcvilla]

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!

[neoneros]

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

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

[Jakesy]

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

You must be a dad...

[najzenmajsen]

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?

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 : )

[najzenmajsen]

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

You must be a dad...

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