Jameson Lopp, a former Engineer for BitGo and the current Engineer for CasaHODL, claims that over BTC 4 million have been lost and over BTC 2 million have been stolen. This suggests that there are much fewer Bitcoins in circulation than the total supply of BTC 17.13 million that have been mined since the genesis block.

There is some debate that perhaps Bitcoin’s price is underestimated as it doesn’t account for the lost Bitcoins. However, others argue that the price of Bitcoin is based on supply and demand and adjusts naturally; if these lost Bitcoins were somehow found, then Bitcoin’s price would go down accordingly.

If millions of Bitcoins truly are lost, then the statistic that needs adjustment is the market capitalization. Currently, the market cap is USD 114 billion as of 5 July 2018, but if BTC 4 million are lost, then the true market cap is near USD 88 billion.

Estimates of lost coins should be taken with caution, however. The most often cited statistic for lost Bitcoins comes from a Chainalysis study released in November 2017 that concludes that BTC 3.79 million are lost. This number is only an estimate based on assumptions, since there is no way to know if Bitcoins are truly lost. The study assumed that Bitcoins idling for a long time are lost, which is not always true.

Chainalysis also assumes that the over BTC 1 million Bitcoins mined by Satoshi Nakamoto are “lost”, having idled for almost ten years. It is unlikely that the private keys for these were lost, but one can only speculate on what plans Nakamoto had for the Bitcoin mined, if at all there were any plans.

Regardless of how many Bitcoins actually are lost forever, the fact that Bitcoins can be lost will be important for Bitcoin’s future price. Over time, people will be losing Bitcoins due to computer malfunctions, throwing out private keys by accident, other disasters, and death. Considering Bitcoin has a fixed maximum supply of 21 million coins, losing them will provide a mechanism for long-term deflation, which will cause Bitcoin’s price relative to fiat to increase.


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