November 27, 2017

Satoshi Secrets & Why Nearly 4 Million Bitcoins Are "Lost" Forever

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. Those numbers imply 17% to 23% of existing bitcoins, which are today worth around $9,000 each, are lost.

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.

As the graphic above shows, Chainalysis’s conclusions rely on segmenting the existing bitcoin supply based on age and transaction activity. For some segments, the company used statistical sampling to determine the amount lost.

The segment “Mined Coins” reflects bitcoins mined in 2017 (which are presumed not to be lost), while “transactional” refers to those that have moved or spent in the last year—very few of which are lost. Likewise, the category of “Strategic Investors,” who have held their bitcoins for 1-2 years represent a very small share of the losses.

Here’s the data in another format, which shows how “Out of circulation” bitcoins - those mined 2-7 years ago and belonging to long-time investors known as “hodlers” - and those from the early days of bitcoin in 2009 and 2010 account for the vast majority of the lost coins:

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