As we know, only 21 million bitcoins will ever exist. But what would happen if a person who possesses bitcoins dies, or perhaps never uses them? Are they considered to be taken out of the bitcoin circulation? Researchers have found that a full 64% of bitcoins have never been spent; the question is whether they still can be.
According to a Bitcoins researcher, Greg Schvey, it is tough to tell apart lost bitcoins and those which are just being saved for a rainy day. However, the blockchain includes every transaction ever made using the currency. Whenever miners verify new transactions, what they’re actually doing is adding on new blocks onto the blockchain.
So these unused bitcoins just sit on the blockchain until someone uses their private key to move them to another address. There are ways to analyze the blockchain and see how long bitcoins have been idle or unused or haven’t moved around for a period of time. However, there is no way of knowing whether they are permanently inaccessible or not.
Bitcoins can be lost or misplaced because of various reasons including death, hardware failures or even plain carelessness. A programmer in Florida, Laszlo Hanyecz had supposedly bought two pizzas in 2010 for 10,000 Bitcoins. If he had done the same in 2017, the era of the Bitcoin’s zenith point, that particular pizza would have cost him at least $ 10 million.
However, such stories are not extremely surprising or uncommon back in those years; especially because no one had a clue about the cryptocurrencies’ value in the coming years. In 2013, there was another tale was a Welsh IT worker, James Howells who had lost almost 7,500 Bitcoins!
Apparently, he had accidentally thrown out an old hard disk which contained his private key. And according to reports today, that disk now lies under tones of piles of landfill inside a waste recycling centre in Pillgwenlly, Newport. If Howells had taken a little care of the same hard disk, he would be a millionaire today!
With the addition of famous reported stories of Bitcoins, there are also numerous lesser known ones. In 2010, London-based developer David Kitchen mined around 50 bitcoins, then halted mining them because he got annoyed with the noise of the fans on his mining computer. Immediately, he put away all of those mined coins onto a USB stick and forgot about it, until its prices had begun intensifying. Sadly, by then David claimed to have lost it. “At the peak, the Bitcoins would have been worth around £50k. I looked, on many occasions, but have never found it. I suspect I didn’t actually lose the USB stick but just overwrote it with a Linux installer or something, the modern equivalent of recording a TV program over a VHS of your wedding,” he had said.
Can we recover lost coins?
It is very safe to say that many people have lost their Bitcoins. The real question is whether the Bitcoins are lost for good or not? As the price of Bitcoin continues to rush forward and its demand for cracking forgotten passwords increases, services have come up to assist people in recovering their Bitcoin wallets. However, these options are limited. There are also a number of tutorials to recover bitcoins in cases of technical difficulties.
“Presumably the rate of losing coins will go down because people are very much careful about how they are stored,” says Schvey. “People are investing so much money into mining Bitcoin, they’ll take proper practices.” He adds.
How can you prevent Bitcoins from being lost?
- Make sure to keep your Bitcoin Wallet always backed up and encrypted.
- Avoid keeping Bitcoin money on your smartphone; instead, move them to a cold storage (offline wallet) or a hardware wallet.
- Use password managers which can easily generate and store your passwords on multiple devices securely.
- For future safety, consult a legal expert and make a plan for your family to access your Bitcoin in case something would happen to you.
- Make sure to upgrade to a two-factor authentication to all your Bitcoin related accounts for better safety.
Though these would take time for their implementation, it can make a huge difference in the end.