Nearly 4 Million Bitcoins Lost Forever, New Study Says

By in Blockchain News on November 26, 2017
  • According to new research from Chainalysis, a digital forensics firm that studies the bitcoin blockchain, 3.79 million bitcoins are already gone for good based on a high estimate—and 2.78 million based on a low one.
  • While others have speculated about the number of lost bitcoins, the Chainalysis findings are significant because they rely on a detailed empirical analysis of the blockchain, where all bitcoin transactions are recorded.

Jeff John writes (key points selected):

According to new research from Chainalysis, a digital forensics firm that studies the bitcoin blockchain, 3.79 million bitcoins are already gone for good based on a high estimate—and 2.78 million based on a low one.

While others have speculated about the number of lost bitcoins, the Chainalysis findings are significant because they rely on a detailed empirical analysis of the blockchain, where all bitcoin transactions are recorded.

Those from the early days of bitcoin in 2009 and 2010 account for the vast majority of the lost coins: These figures reflect bitcoins that are truly lost, and not hacked or otherwise stolen—in these cases, of course, the bitcoin is not lost since the thief has control of them.

Note the numbers above are based on the high estimate, and that the low estimate, which is based on only a 30% loss in “hodler” coins, puts the number of lost bitcoins at 2,767,468.

Meanwhile, there is a question of whether the Chainalysis findings mean bitcoin is more scarce than people assume—or if the market has already priced the missing coins into the currency’s current value.

Chainalysis, whose clients include the IRS and Europol, has made a name for itself in the bitcoin world because of its abundant data and sophisticated study of blockchain wallets.

These sort of clues help inform the Chainalysis figure for the “hodler” category—wallets belonging to people who got into bitcoin before it hit the big time, and which represent the biggest source of uncertainty as to whether bitcoins are lost or just being hoarded.

As for the 2% of “‘transactional” bitcoins that Chainalysis determined to be gone, Levin says this is based on scraping the Internet for reports of lost coins.

Chainalysis says wallets associated with Satoshi represent about 1 million bitcoins (the company will provide a more specific figure later this year), and that its model assumes that those coins—which date from a time when it was easy to mine 50 bitcoin with a laptop—are gone forever.

Read the full article: http://fortune.com/2017/11/25/lost-bitcoins/

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