Hey cryptofans, we love ya! We all know there are only 21 million bitcoins that will ever exist. But how many of them are already lost? Everyone has read about someone who mined or otherwise acquired bitcoins in the early days, when bitcoin faucets gave out five bitcoins (!!??!!) per drip. And then turned around and lost those ten thousand coins; typically leaving them on a software wallet on an old laptop which was then left at Mom's house and later junked.
I just woke up to bitcoins this year. I already personally spoke to a respectable artist lady who told me she once bought over five thousand bitcoins for around $200. She created a private key that she would always remember, and then promptly forgot. She has tried to guess it over and over with no success. Was she lying, or deluded? Possibly. But her story rings true. Wired magazine semi-burned a bunch of bitcoins from a miner they were given as a gift. At the time, they wanted to be impartial. Not that long after, they tried to regain the bitcoins to pay staff, ooooops...
The very nature of bitcoin includes a focus on secrecy and privacy. Hold the private key or you don't hold the bitcoin. Not trusting a central authority is great, but it means if you lose that private key it is gone, daddy, gone. You can't just show up at the bank with your ID and get your money. J. Paul Getty held his huge fortune very tightly, in a trust to avoid taxes. The details of that meant that when he died, his insane fortune went to a daughter in law who used it in a way Getty would never have approved of. But the Getty fortune was used! Throughout history gold has been stolen, hidden, hoarded, and often these hoards have been found centuries later. There are private keys hidden in obscure locations, engraved in metal and coated with plastic, etc. etc. Some of these will doubtless be found years later, perhaps after the owner has passed. But unlike gold coins, how many of them will still be thrown away? And how many private keys, even if remembered, will pass away with the owner in an accident, or just of crabby old age dementia!? be nice to Grandpa, you never know...
Can anyone treasure hunt for the lost bitcoins? Before the Microsoft billionaire Paul Allen checked out, he had a great time finding pretty much everything that was on the ocean floor....Some people have proposed buying up old laptops to rip out the hard disks and search for bitcoin wallets with private keys. Could work. Can we just try to search and crack the bitcoins ? No, the very security that protects everyone protects the lost bitcoins, barring quantum computing breakthroughs. The artist lady, if her story is true, should probably get professional help. There might be a trace of the private key on her laptop. Or code could be written around the fragments of the key she misremembers which could cut the search down from ten thousand years to maybe in her lifetime.
How big is the hoard of lost bitcoins ? Estimates range all over the map. Almost 12 million bitcoins have not moved in years. How many are lost, or will be lost? A more conservative estimate would be two to four million are already lost. The nearly a million Bitcoin in Satoshi's own wallet may never be moved, as a tribute to the legend.
So what does this all mean? It means, from a fundamental (not chartist) point of view: a big, fat pumping noise for Bitcoin. Satoshi said there will only ever be 21 million bitcoins. Just like old school rugby, there are no substitutions, if you are out, you are out. Then Satoshi said that the mining supply will hit the halvening on the regular, to tighten up the supply and build demand. Lost bitcoins are burned bitcoins, often considered to be a good thing for everyone else. The real supply is down 10%? or 20%? or 30% ?? or sinking, sinking to the bottom of the sea...
What do you think? Love, Dave
