One of the most well-known things about Bitcoin for investors and speculators alike is its fixed, known, maximum supply of 21 million BTC. The max supply ensures there will never be more Bitcoin in circulation than 21 million. The reality is that there will never actually be all 21 million BTC circulating either. There are numerous situations where Bitcoin holders have lost access to their wallet, whether through actually losing/discarding the device the wallet was on, losing the recovery phrase, or forgetting a password.
But how much Bitcoin has been lost forever?
Lost or Inaccessible?
Those that have lost access to their Bitcoin holdings fall into two categories: those who have physically lost the device which held their Bitcoin, and those that can’t access the Bitcoin but still have the device.
For the former, the most Bitcoin anyone has lost like this is about 8,000 BTC. An engineer from Wales, James Howells, had been mining Bitcoin for some time when in August 2013, he accidentally threw away the harddrive that contained his Bitcoin wallet. Now, for those readers using crypto currently, you’re probably wondering why Howells doesn’t just use his recovery phrase in order to restore the lost wallet on a new device.
Unfortunately for Howells, recovery phrases weren’t introduced until September 2013 with Bitcoin Improvement Proposal 39. This means that until that proposal was passed, the only way to recover your wallet was to have written down the private key somewhere, which most people didn’t do. Howells has been searching his town’s dump for the harddrive ever since he realized what he’d done, but hasn’t found anything yet. The Bitcoin on that harddrive is worth over $200 million USD nowadays, and at one point, it was worth well over half a billion.
For the latter category, the most Bitcoin anyone has lost in the form of being unable to access it on a device they still have, is about 7,000. Stefan Thomas, a programmer living in San Francisco, had his Bitcoin stored on an IronKey hardware wallet. This hardware wallet requires a user created password to access the funds on it, with the caveat that after 10 incorrect guesses the device will fully encrypt and lock you out from guessing again.
Unfortunately for Thomas, the piece of paper where he wrote down the password has been lost. As of 2021, he had just 2 guesses left to work with, but he’s come to terms with the loss and isn’t going to use up the two attempts anytime soon. It’s possible that eventually there will be a way to “hack” his device in order to reveal the password, but that will be risky.
Satoshi’s Bitcoin Stash
Apart from those that have lost access to their Bitcoin, there is also the never moving stash of Satoshi Nakamoto’s BTC. As they started the blockchain with the genesis block, they were also the one to mine about 22,000 blocks during the first year Bitcoin of its life. Overall, it’s estimated that about 1.8 million BTC was mined by Nakamoto, with 1.1 million still never being spent. These numbers were discovered by Sergio Lerner, who identified a pattern that allowed him to attribute the mining to one entity.
So How Much Has Been Lost Forever?
Nakamoto’s Bitcoin stash has never moved, and if and when it does Nakamoto could single-handedly crash the market. You can’t really say that it has been lost forever because there’s no guarantee that Nakamoto isn’t alive or able to move it.
Overall, there are estimates that about 4 million Bitcoins are currently “lost”. This means that there will actually only ever be about 17 million BTC circulating, barring some sort of recovery of the lost BTC. This number includes Nakamoto’s however, meaning that the true number may be a million less than thought.
One thing is for sure, it’s certainly not a bad thing that there’s even less of it available.