• X
  • Listen in to our latest podcast!

    November 28, 2017

    Up to four million Bitcoins could already be gone forever

    4 million stolen bitcoins

    Digital forensics firm Chainanalysis has reported that up to four million Bitcoins could have already been taken out of circulation.

    While Bitcoins themselves are nigh-on impossible to hack or alter, the storage technology employed by investors around the world isn’t as secure – and now digital forensics firm Chainanalysis has reported that up to four million Bitcoins may be lost forever.

    Chainanalysis reports that an estimated figure of 3.79 million Bitcoins have already been lost – constituting some 17 to 23 percent of mined coins in circulation today.

    Read: Attack on popular Ethereum wallet results in the lock-up of over 500,000 Ether

    The firm’s report illustrates that some 2.56 million Bitcoins have been lost and removed out of circulation, and further takes into account Satoshi Nakamoto’s unspent allocation of 1.04 million Bitcoins, which the firm deems to have been removed from circulation as well.

    The firm further lists that some 121,300 and 71,200 Bitcoins have been lost thanks to both buying and selling action as well as strategic investments, respectively.

    The report does not take into account the fact that the US Federal Bureau of Investigation (FBI) is further estimated to be sitting on some 144,000 Bitcoins seized from operations on Silk Road – an online black market. It remains unknown as to what the FBI will do with the seized allocation in the future.

    4 million missing bitcoins

    Source: Chainanalysis

    As one of Bitcoin’s key premises is the fact that only 21 million coins will ever be mined, the fact that 23 percent of all coins could be deemed missing has an immense effect on the cryptocurrency market – which could essentially render Bitcoins even rarer than investors might initially presume.

    Speaking to whether the lost Bitcoins may have an affect on the cryptocurrency’s future value, Kim Grauer, Senior Economist at Chainalysis, offered that “On the one hand, direct calculations about market cap do not take lost coins into consideration. Considering how highly speculative this field is, those market cap calculations may make it into economic models of the market that impact spending activity… Yet the market has adapted to the actual demand and supply available – just look at exchange behavior. Furthermore, it is well known monetary policy procedure to lower or increase fiat reserves to impact exchange rates. So the answer is yes and no.”

    Read: Traveler loses $100K in Bitcoin over a public wireless network

    What are your thoughts? Be sure to let us know your opinion in the comments below!

    Follow Bryan Smith on Twitter: @bryansmithSA

    Listen in to our latest podcast!