Based on research conducted by Chainalogy, a blockchain data platform, the number of bitcoins lost may be between 17% and 23% of the total bitcoin supply, which is between 2.78 million and 3.79 million bitcoins. Bitcoin founder Satoshi Nakamoto's wallets are also expected to contain up to 1 million Bitcoins of early mining rewards, contributing to a large percentage of lost or dormant Bitcoin. Through this article we know more about this topic
The article revolves around the following main points
What is missing bitcoin?
How to lose Bitcoin?
Consequences of losing Bitcoin
Is it possible to recover lost bitcoins?
The safest ways to store Bitcoin
Lost Bitcoin FAQ
What is missing bitcoin?
In simple terms, it can be said that lost bitcoins on the Bitcoin blockchain are those that their owners cannot access or control. Bitcoin (BTC) is a decentralized digital currency whose records are stored across a distributed set of nodes that together form a public ledger, also known as a blockchain. In the Bitcoin blockchain, wallet users have a public address and maintain a private key that allows them to control the assets stored at that address.
There is a maximum of 21 million Bitcoins that can be traded. This limit was designed and programmed within the protocol. Bitcoin's design is inherently deflationary, as Bitcoin becomes increasingly scarce over time. The value of Bitcoin is supported in part by this maximum total supply and by the periodic reduction of rewards (through the Bitcoin mining reward fork) that are awarded to miners when new Bitcoin is introduced into circulation.
Any lost Bitcoin increases the deflation process and contributes to the scarcity of available Bitcoin. It is difficult to determine the exact number of lost Bitcoins, as some wallets could just be dormant and not lost as their owners prefer to store and not move their digital currencies for a very long time.
How to lose Bitcoin?
Bitcoin can be lost due to user errors or malicious actions of third parties via scams, hacks or social engineering. Here are some possible scenarios for losing Bitcoin.
Loss of private key: Security failures, such as negligence, falling victim to social engineering, or being hacked, can lead to private keys being leaked, allowing bad actors to steal people's bitcoins. This can happen as part of phishing scams, malware, or other fraud scenarios.
Sending to the wrong network: This happens frequently and often when transferring Bitcoin; If users accidentally send it to the wrong network or to an invalid address (such as missing a number or letter), it will never be possible to recover it. This problem is more common due to the emergence of certain arrangements in the Bitcoin ecosystem, where some wallets have a different address than the standard Bitcoin address.
Sending to the wrong address: When transferring Bitcoin, if users send it to the wrong address, it can be very difficult to recover it. The key issue is identifying the true recipient of the transfer, and then having a reasonable mechanism to request the return, all of which is a major challenge in a decentralized ecosystem.
Damaged Wallets: If a user's Bitcoin wallet becomes corrupted or corrupted for any reason, they will likely lose access to their Bitcoin. However, if the user owns the private key, a new wallet can be set up and assets recovered using the private key.
Users abandoning wallets: Many dormant addresses on the Bitcoin network have not seen any activity at all for many reasons. One such reason could be that the owners have forgotten their private keys and cannot access their coins, resulting in unrecoverable Bitcoin. It is also possible that the owners have gotten rid of old computers, hardware wallets, or deleted recovery files, which reduces the Their options for regaining access to Bitcoin.
Inheritance issues: Another form of abandonment, where the owners of private keys may unfortunately pass away, without anyone else having access to their private keys, resulting in the loss of their cryptocurrency holdings. This can happen to both private wallets and accounts on centralized trading platforms if there is not a clear nomination process set up or available for next of kin.
Enforcement Actions: Users can also lose their Bitcoins due to seizure of cryptocurrencies by government authorities. These actions are targeted based on the law, and in the case of private wallets, users will still have to hand over their private keys to the authorities to continue enforcement actions.
Centralized Exchanges Hacked: Centralized exchanges that hold users' assets are also at risk of being hacked or losing assets due to insolvency, resulting in users being unable to access their cryptocurrencies.
Consequences of losing Bitcoin:
With increasing awareness and institutional interest, Bitcoin is gaining more recognition as digital gold and a good store of value. Any lost Bitcoin can represent a huge loss to users' wallets.
Since its emergence in 2009, Bitcoin has held a unique position among digital currencies as a store of value. The launch of Bitcoin exchange-traded funds (ETF) has brought massive institutional liquidity and significant interest in Bitcoin. These factors have led many experts to predict significant valuations for Bitcoin in the future.
Users who lose their Bitcoin forever without the possibility of recovering it may suffer from feelings of guilt and self-blame. Although there is a lot of focus on narratives around gains and victories, such losses are, unfortunately, part of dealing with the cryptocurrency ecosystem.
The industry should focus on innovative multi-signature wallet solutions that can reduce the possibility of such losses to users in the future. This would help reduce fraud and accidental loss of keys, thus encouraging wider adoption.
The deflationary nature of Bitcoin adds complexity. Every lost Bitcoin accelerates the scarcity of available digital currencies. Unlike some speculators, institutions and high-net-worth individuals tend to take long-term positions in Bitcoin rather than engage in frequent trading. The combined effect of these factors indicates a trend toward increasing Bitcoin scarcity and the potential for higher prices in the future.
Maintaining the value of Bitcoin and promoting its widespread adoption requires improving technologies and mechanisms that help protect assets and reduce the risks related to the loss of Bitcoin. Through this, trust in this digital currency can be enhanced and its position as a reliable store of value strengthened.
Is it possible to recover lost bitcoins?
It is almost impossible, of course, while maintaining some hope, as the possibility of recovering any Bitcoin depends on a set of factors related to the loss and what is available for rebuilding.
Here are some possible avenues that users can explore to recover their lost Bitcoin:
Data recovery services: Some companies specialize in recovering lost cryptocurrencies. These companies handle multiple scenarios that include drive problems, hardware failure, forgotten passwords, wallet corruption, data loss, or sending coins to incorrect receiving addresses. These companies offer a variety of techniques, ranging from partially or completely forcibly rebuilding seed phrases, to rebuilding wallets, forgetting passwords, and guessing and retrieving keys stored on a hard drive. These companies tend to have a higher success rate when the computer or device containing the original data can be accessed, allowing access to be reverse-engineered. However, complete reconstruction of a forgotten seed phrase is very difficult due to the complexity of the encryption process. Users should be careful when dealing with these companies, and choose those with a good reputation, reliable reviews and a proven track record of success, as some services may be scams or overpriced without tangible results.
Private investigation companies: These companies deal with hacking or fraud cases involving large amounts of money. These companies have a wide range of investigative tools and, in many cases, collaborate with law enforcement to go after bad actors and recover some of the stolen Bitcoin. These companies are a viable alternative for users who have lost large amounts of Bitcoin and prefer to try to recover them.
In short, recovering lost Bitcoin depends on the nature of the loss and the resources available to rebuild access to the lost assets. Although some cases may be difficult and complex, there are options that can be explored to attempt to recover lost Bitcoin.
After reviewing how you can lose Bitcoin, here is the following:
The safest ways to store Bitcoin:
The following methods are among the most secure ways to store Bitcoin, as they rely on cold storage, strong security practices, and personal control of private keys:
1. Cold storage:
Hardware Wallets: A hardware wallet is one of the most popular and secure ways to store Bitcoin. These wallets keep private keys offline, protecting them from cyber threats. Hardware wallets enable secure transactions and are a reliable cold storage solution.
Paper wallets: Paper wallets provide a high level of security by printing private and public keys on paper. The paper is kept in a safe place away from the Internet, which protects it from hacking and electronic threats. It is essential to keep secure backups of these paper keys.
2. Secure backups: Regardless of the storage method used, keeping secure backups of your private keys is vital. These backups should be stored in different, secure locations to prevent their loss in the event of an emergency.
3. Trusted software wallets: If users choose software wallets, they should make sure to choose wallets that are reliable and known for their good reputation for security. It is essential to do the necessary research before choosing the right wallet.
4. Avoid storing large amounts on trading platforms: Although trading platforms provide easy access and trading, they are easy targets for hackers. Therefore, it is advised not to store large amounts of Bitcoin on trading platforms and use it only for transfers and trading.
5. Fraud and Phishing Awareness:
Beware of phishing attempts: Users should be wary of suspicious messages and emails that may be phishing attempts to steal login information and private keys.
Good password hygiene: Using strong, unique passwords and changing them regularly increases security. It is preferable to use password managers to generate and store complex passwords.
Additional tips:
Use Two-Factor Authentication (2FA): Add an extra layer of security by using two-factor authentication on all Bitcoin-related accounts.
Education and Awareness: Continuing learning and education about the latest security technologies and best practices in protecting digital assets.
By following these tips and practices, users can ensure their Bitcoin is stored safely and reduce the risk of loss or theft.
