Are lost Bitcoins lost forever?
Content Marketing Team
When people invest in Bitcoin, they are investing in the future of the crypto world through the largest and most reputable cryptocurrency out there. But what happens when a holder loses their Bitcoin wallet? Are those Bitcoins lost forever? This blog will take a closer look at what happens to lost Bitcoins and whether or not they are truly lost forever.
Different ways you can lose your Bitcoin
Bitcoin is a digital asset and a payment system invented by its pseudonymous creator Satoshi Nakamoto. Transactions are verified by network nodes through cryptography and recorded in a publicly distributed ledger called a blockchain. Unlike other assets such as stocks or bonds, Bitcoin does not confer ownership rights. So if you lose your Bitcoin, it is gone forever.
A majority of individuals navigate the crypto ecosystem through the use of a crypto wallet. A crypto wallet enables you to keep your crypto holdings safe and accessible while allowing you to seamlessly send, receive, and spend cryptocurrencies. Unlike traditional wallets that hold actual cash, crypto wallets do not technically store your crypto but instead keep track of your private keys.
People lose their Bitcoin in many different ways. One of the most common is through losing private keys. All cryptocurrencies, including Bitcoin, live on the blockchain and can be accessed using a private key. Private keys act as proof of ownership (like a password), which, if lost, lead to an inability to access your crypto holdings. Losing your private key can be a widespread mistake and can occur through a simple misplacement or the deletion of a wallet file.
Another way people lose their Bitcoin is by falling victim to fraud or a hack. For example, this can occur when a hacker gains access to your private key and uses it to access your crypto holdings. Whatever the case may be, once your Bitcoin is gone, it can be a complicated and enduring process to get back. This is why it is essential to take measures that protect your Bitcoin, such as keeping multiple backups in secure locations or encrypting your wallet with a strong password.
One of the most painful and irreversible ways to lose your Bitcoin is by sending it to an address that doesn’t exist. One mistyped character out of the 32-character string can result in the loss of your Bitcoin. This is why it is always important to double-check the address you are sending your crypto to, in an effort to ensure it is getting sent to the right place on the correct blockchain.
How many missing Bitcoins are there?
There are currently just over 19 million Bitcoins in circulation, with a total supply of 21 million. However, according to estimates from Glassnode data, just under 10% of Bitcoin’s total supply, totalling around 1.86 million coins, may never be found. Other reports, such as data from Chanalysis, suggest that the number of missing Bitcoins may be as high as 25%. These coins total tens of billions of dollars and may remain inaccessible forever. This reduction in circulating supply bodes well for Bitcoin, which, like other assets, favours a deflationary environment.
Most of these missing Bitcoins are thought to be the result of people losing their private keys, either through death or simply forgetting them. Other causes include hardware failures, scams, and theft. Given the difficulty of recovering lost Bitcoins, it remains unlikely that the number of missing coins will ever be known. However, even if all of the missing Bitcoin were to be found tomorrow, there would still only be a limited supply available, which is one of the most significant value propositions that Bitcoin presents as a store of value.
Is there any way to recover lost Bitcoin?
Recovering lost Bitcoin is a challenging feat and often impossible, given the network’s security. As a decentralized network, Bitcoin’s security works both ways. It does a phenomenal job of keeping hackers from taking hold of your crypto holdings, but it also presents a massive challenge in the event your private keys are lost.
Some companies like Crypto Asset Recovery aim to aid people in the recovery of their lost Bitcoin originally held on hardware wallets. However, even their founders agree that corrupted hard drives or those thrown away are likely gone for good.
People who have held Bitcoin on a hardware wallet may be able to recover their holdings, depending on individual cases. However, it is essential to prioritize keeping your private keys safe, secure, and accessible to avoid potential loss. Recovering lost Bitcoin is often not an option, so the best you can do is avoid that by any means possible.
Bitcoin lost on a cryptocurrency exchange, trading platform, or custodial wallet through potential hacks or glitches is another topic of conversation. Various platforms or companies may be able to aid you in the event of loss and are often obligated to do so; this is one of the positives of centralization and a possible way to recover your Bitcoin, depending on your circumstances.
How many blocks of Bitcoin are left to mine?
When Satoshi Nakamoto created Bitcoin, he imposed a hard cap or maximum limit through a method in the source code. As a result, the supply of Bitcoin is increased every ten minutes at a rate of one “block.” The technique that Satoshi imposed reduces the number of new bitcoins in each block by half every four years.
For example, mining a block in 2009 generated 50 Bitcoins. However, the first halving took place in 2012, where each block only produced 25 Bitcoins from that point forth. In 2016, that number was cut down to 12.5 Bitcoin, and since 2020, each block mined has earned 6.25 Bitcoins.
Experts predict that the last block of Bitcoin will be mined in the year 2140, with just under 2 million coins left to mine from now to then. As the growth in Bitcoin’s supply continues to slow down, it will be interesting to see how the coin’s price action continues to evolve.
Who lost the most Bitcoin in history?
There are many different stories of people losing massive amounts of Bitcoin, some from theft and many from simple misplacement. However, the most significant official loss comes from Stefan Thomas, who made headlines in early 2022 for getting locked out of his Bitcoin fortune.
Stefan Thomas was a San Francisco software developer who bought 7,002 Bitcoins in 2011. Thomas held the fortune, currently worth over $100 million, on his Bitcoin wallet, specifically his crypto hardware wallet called IronKey. Unfortunately, to access his private keys, Thomas had to input a password, which he had simply forgotten and had a total of ten attempts to guess the correct password and open the key.
Thomas attempted eight different passwords in an attempt to access his wallet, after which he turned to social media and news headlines for assistance. After his failed attempts, password guessers have just two shots to crack the code. Thomas has since put the IronKey in a secure facility, hoping that cryptographers eventually come up with new ways of guessing complex passwords down the line.
However, the largest story of lost Bitcoin belongs to its creator Satoshi Nakamoto. Who has been sitting on a well-known Bitcoin fortune since the cryptocurrencies creation. Much of the speculation about this story revolves around how lost the coins are.
Satoshi’s wallet contains around 1.1 million Bitcoins which were all mined in the early days of the cryptocurrency. The number calculated by recent reports totals over 5% of all Bitcoin ever mined. It is up to debate whether Satoshi will ever access these coins. Until now, no one has ever processed a single transaction through the wallet address. This has raised questions surrounding whether Satoshi still has access to the private keys that contain the funds in the first place.
No matter what, it is certainly possible that Satoshi is either unwilling or incapable of spending the fortune. The risk of doing so may lead to the creator’s eventual identification, which is something that has remained hidden to this day. If Satoshi’s identity were ever publicly revealed, that would have dramatic implications for Bitcoin and the remainder of the crypto market.
By the looks of it, a substantial amount of Bitcoin is lost without much potential for recovery. However, that does not mean it is all lost forever, as there are particular ways to recover those lost assets. However, it does point to the importance of maintaining a good understanding of the different crypto wallets, and easy ways to eliminate the possibility of loss.
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