Coin Metrics’ recent reports claim that approximately 1.6 million BTC have been lost forever, either via replica transactions, unclaimed mining rewards, or theft.
Coin Metrics published an analysis that showed the world’s largest cryptocurrency might be even more scarce than most people think. Their report, which set out to calculate Bitcoin’s circulating supply, found that it was considerably smaller than it ought to be.
While Bitcoin’s whitepaper only touches on the issue of supply, one of its biggest value propositions is its scarcity. With a supply capped at 21 million coins that halves every four years, Bitcoin doesn’t let anybody overlook its scarcity.
When added together, lost BTC amount to more than 1.6 million, pushing Bitcoin’s genuine supply down to just over 16.4 million coins.
With a dwindling liquid supply of about 16.4 million and less than 3 million left to mine, investing in Bitcoin is becoming scarcer with each passing day.
World’s Biggest Cryptocurrency Becoming Rarer
Coin Metric’s analysis found that the provably lost coins were the genesis coins, duplicate transactions, unclaimed mining rewards, and OP return outputs.
Bitcoin’s first block, called the genesis block, contains a transaction with a 50 BTC output, which wasn’t included in Bitcoin’s ledger, while instances of duplicate transactions on the network led to 100 BTC being removed from the blockchain.
Likewise, 3 BTC were embedded into the blockchain as messages, effectively making them unspendable forever.
The report further showed that before OP_RETURN outputs were standardized, a substantial amount of coins were sent to fake addresses to burn them. Three of these bogus addresses currently hold over 2200 BTC, which aren’t lost forever but are unlikely ever to be recovered.
Another category of coins that is most likely lost forever, according to Coin Metrics are “zombie coins.” These are the coins that have been inactive for a long time. The report calculates that around 1.5 million BTC that haven’t been used since July 2010.
A Large Volume of BTC is Lost to Theft
The last group of coins considered lost by the report are dubbed ‘stolen coins’. As the structure of Bitcoin’s records makes it easy to trace these stolen coins, it’s very unlikely they will ever be introduced back into circulation.
While there are only 182 provably lost bitcoins, the report assumes that at least 1.6 million are probably lost forever.