The Plight of the Lost Wallet: Millions in Bitcoin Gone Forever as Price Continues to Rise
A man from Melbourne, Australia is one of the latest victims to share his story about a fortune he would have had, had he not lost access to his bitcoins.
“If my wife knows, I’m dead,” he admitted, asking News.com.au not to share his real name, and referred to as ‘Alex.’
A self-confessed technology enthusiast, he began mining bitcoin, at the time getting a few coins every day. When the bitcoin program began to take up too much space on his computer, he deleted it and backed it up on a USB drive. Years later, as the value of bitcoin reached $1000, he remembered the USB drive; only to find that it had malfunctioned, and the bitcoins had been permanently lost.
Sadly, he isn’t alone in his misfortune. According to Fox News, an estimated 3.8 million bitcoin are lost, quite possibly irrevocably. As of December 4, 2017, that would equate to close to $42 billion in fiat currency or just over 18 percent of the cryptocurrency’s total supply.
This may well outstrip the combined value of all the gold bullion ever lost, lying in undiscovered shipwrecks under the ocean or buried beneath hundreds of feet of soil and snow.
Bitcoin is so securely encrypted that in some cases, it becomes more of a curse than a blessing. In initial years, should an owner have lost access to his wallet, the bitcoins would almost certainly have been lost forever.
More recently, however, the most trusted of wallets and exchanges have rolled out recovery options for just these cases – but what happened to all the bitcoins that were lost?
Misplaced bitcoins do not disappear; they remain a visible but inaccessible part of the blockchain. In November 2017, the number of bitcoins said to be out of circulation was approximately five million, although it is not immediately clear how many are permanently lost and how many are simply stored by the owners.
In a study conducted by Chainalysis, it is estimated that 30 to 50 percent of dormant bitcoins are permanently irretrievable.
Additionally, before the disappearance of Satoshi Nakamoto, he is said to have mined just over one million bitcoin, which are presumed to have been lost with him. As the original founder( or founders) remains in a cloud of uncertainty, there is no way of knowing whether it was an intentional act as a means of bootstrapping bitcoin, or an unexplained tragedy. What is visible, however, is that not a single transaction has ever been made with the ‘Satoshi coins.’
IBM chief technology officer, Bruce Schneier, spoke of the impossibility of hacking a 256-bit key, saying that it would be “infeasible until computers are built from something other than matter and occupy something other than space.”
As such, it is highly improbable at this stage that lost coins will ever be recovered – by their original owners or otherwise.
In a 2014 article, NVIDIA engineer John Ratcliff spoke of bitcoins having lain dormant for over 18 months as “zombie bitcoins.” According to his estimations at the time, 30 percent of all bitcoins were zombie coins, having been mined in bitcoin’s infancy when they were worth just a few cents, later to be lost or forgotten.
Over the years, a number of people have come forward and shared their stories of fortunes in bitcoin being permanently lost. In a cruel twist of fate, bitcoin’s rising value makes the regret stronger each day, with ‘Alex’ from Melbourne missing out on millions. But the Australian man is not too worried, stating that he had mined some Ethereum earlier in 2017, “One day, maybe Ethereum might restore what I lost with bitcoin.”