A prominent cryptocurrency engineer has spoken at length this week regarding the issue of lost and stolen Bitcoin. Whilst this issue might seem trivial at first glance for those not affected, it has overarching effects on the total supply and price of Bitcoin.
The issue was raised by Jameson Lopp, who has previously been the lead engineer at BitGo as well as an engineer for CasaHODL, who spoke at the Building on Bitcoin this week. More specifically, Lopp stated that a whopping amount of six million Bitcoin is currently inaccessible.
These six million Bitcoin consist of roughly 2 million stolen Bitcoin, as well as 4 million Bitcoin which are irretrievably lost. Moreover, as it is impossible to hard fork the blockchain in an effort to retrieve these lost Bitcoin, this means that a staggering 28.5% of Bitcoin’s fixed supply will remain lost.
This means that although 17 million Bitcoin are currently in circulation, a mere 11 million are actually accessible for users. What’s more, only 21 million Bitcoin can ever exist – at least 6 million of which will, therefore, remain unreachable for users.
Investors and analysts have frequently linked the price of Bitcoin to the fixed supply of the cryptocurrency. However, these findings would entail that the total accessible supply of Bitcoin will at the most be 71.5% of the 21 million Bitcoin that can be produced.
Furthermore, this is barring any further lost or stolen Bitcoin. Basic economics and supply and demand would, therefore, indicate that the long-term price of Bitcoin should increase, as investors realize that only around two-thirds of the total Bitcoin supply will be available.
Also, Lopp’s comments mimic those of Chainalysis, who published a report in November of last year, detailing how 3.79 million Bitcoin could already have been irreversibly lost.
Nonetheless, the senior economist at Chainalysis, Kim Grauer, explained that is is hard to know whether these lost Bitcoin are priced in by the market or not. This is primarily due to the speculative nature of cryptocurrencies in general.
However, if one would assume that the Bitcoin price at the time of writing, around $6,700, is based on the assumed figure of 17.13 million Bitcoin accessible in the market, that number would have to be adjusted to account for these 6 million lost Bitcoin.
This would instead yield a current price of $10,300, as there’s only around 11 million accessible Bitcoin, according to Lopp’s talk at the Building on Bitcoin conference.
Whilst it is impossible to know what a current ”accurate” price of Bitcoin would be, this certainly provides some food for thought. If Lopp’s reasoning and statements are indeed accurate, they would suggest that Bitcoin could be in for a significant price increase as this becomes public knowledge.
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Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the cryptocurrency industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.