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April 25, 2022

How many Bitcoins have been lost forever (and where did they go)?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let’s talk about lost Bitcoins – how many have been lost, who lost them, and why most people can never get them back.

You’ve probably seen news articles about some of those unfortunate cases: Someone invested a few dollars into Bitcoin early on, not thinking much about it, and fast forward a few years and they are suddenly millionaires. On paper only though, because they can’t find the keys to their wallet.

Researchers estimate that a whopping 25% of total Bitcoins, which is little under 5 million of them, may have gone lost that way. That would equal roughly 200 billion dollars, 70% of which is estimated to belong to early adopters such as the infamous Bitcoin inventor Satoshi Nakamoto himself who never cashed out a single Bitcoin, despite sitting on 40 billion dollars worth of them.

So, what’s actually going on here? The problem is that Bitcoins, and most other cryptocurrencies, can only be moved with the key to the wallet that holds them. That key is a cryptographic code, a long string of random numbers and letters, which is impossible to remember. Most people don’t even know they have one, because their apps or wallets take care of those in the background.

And that’s the reason most people lost them in the first place. The early wallets and keys were all stored on the owners’ computers, and those old hard drives have long gone bad or went to the trash. And guessing a lost key is impossible due to the amount of possible combinations to try.

Frustratingly, all those lost Bitcoins have actually gone nowhere. They still sit in the same wallets, for everyone to see but no one to claim. Let that be a lesson: No matter how little you think your crypto investments are worth today, make sure you have them in a safe place.

Next time, we’ll talk about such a thing: Hardware wallets and how they work.

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