A lot of things have happened in the world of Bitcoin throughout the years. More specifically, there have been major developments, thefts, scams, and an increase in global interest. This mixed bag of activity has also caused a lot of coins to be removed from circulation permanently. According to Chainalysis, that number may be as high as 4 million BTC.
The Bitcoin Supply is Smaller Than Assumed
Most cryptocurrency enthusiasts are well aware that there is a limited number of Bitcoins. Once all coins have been mined – 122 years from now – there are supposed to be a total of 21 million Bitcoins in circulation. Unfortunately, that is not entirely true, as there will be a lot fewer coins to go around by that time. Even right now, there aren’t over 16 million BTC in circulation just yet. Many people tend to forget that a lot of coins have been lost over the past few years, although not all of them were removed from circulation due to scams or hacks.
A new study shows that over 1 million “original coins” have been lost. Satoshi Nakamoto controls a few different wallets which contain significant amounts of Bitcoin. None of those coins have ever moved since they originally arrived in those wallets, nor will they move anytime soon either. It is doubtful that Nakamoto is still around or even has access to the private keys associated with the wallets in question. Craig Wright claimed he had access to those keys, but that eventually turned out to be false.
Such a significant amount of coins being inaccessible may have a positive effect on the Bitcoin price over time. Unfortunately, these are not the only coins lost to the Bitcoin community forever. Chainalysis claims there are close to 2.5 million coins out of circulation altogether, although it is unclear how they were removed in the first place. That is quite a steep amount of coins to have vanished, and it does not include coins which were sold on the open market or stolen by thieves over the past few years.
Instead, they are simply coins no longer in circulation, potentially due to wallets being lost or addresses no longer being used despite containing Bitcoin balances. We have all heard multiple stories of people removing a hard drive or mobile device which stored their Bitcoin wallet without making a proper backup of the associated private key. Issues like these need to be avoided first and foremost, but that is often much easier said than done. Most Bitcoin users have smartened up in this regard over the past few years, though.
Additionally, Chainalysis found that around 121,000 coins have been lost due to buying or selling. That is a rather perplexing statistic, considering that the buying and selling of Bitcoin hardly ever results in funds being lost forever. Again, it is a bit unclear how the company came to this number or how it should be interpreted. There is a fair amount of data contained in the report, but the company doesn’t necessarily explain how it came to its conclusion regarding the buying and selling of BTC. Then again, it is not unlikely that some people lost money in this manner.
All of this goes to show there are fewer Bitcoins available on the open market than most people would assume. It is certainly possible the numbers presented by Chainalysis are not entirely correct, but it is safe to assume the coins owned by Satoshi Nakamoto will not be brought into circulation ever again. Add the potential number of lost currency due to the lack of wallet backups to this list, and it quickly becomes evident that the supply is down by at least 2 million in the best case scenario. The worst case scenario would be that these numbers are spot on, and nearly 4 million BTC is effectively gone forever. If that’s the case, the maximum amount of Bitcoin to ever be in circulation at one point in time will be just over 16 million.