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Bitcoin Businesses The Almighty Buck Technology

Nearly 4 Million Bitcoins Lost Forever, New Study Says (fortune.com) 218

Posted by msmash from the lost-in-transition dept.
An anonymous reader shares a report: 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 $9,700 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.
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Nearly 4 Million Bitcoins Lost Forever, New Study Says More

Nearly 4 Million Bitcoins Lost Forever, New Study Says

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  • Have They Looked Under the Seat Cushions? (Score:5, Funny)

    by nsuccorso ( 41169 ) on Monday November 27, 2017 @11:25AM (#55629655)
    How about the vacuum cleaner bag?
    • Glove box, don't forget the glove box and the central console, under all the usb cables, candy wrappers, Taco Bell sauce sachets and the long forgotten CD of Barney Rhymes. "I love you. You love me..."

      Tip: If that tune is stuck in your head now, Harvard researchers have found a cure. Painful as it, if you sing/play in your mind till it reaches the end, then it will be gone.

      • if you sing/play in your mind till it reaches the end, then it will be gone.

        [citation needed]

        • Jakubowski recommends ... try engaging with the song, as many people report that actually listening to an earworm song all the way through can help eliminate having it stuck on a loop

          Citation provided. [cbsnews.com]

          • Thanks! :)

            The article does make that suggestion but also some others that may be less painful:

            Jakubowski recommends trying to distract yourself by thinking of or listening to a different song. If that doesn’t work, try engaging with the song, as many people report that actually listening to an earworm song all the way through can help eliminate having it stuck on a loop.

            Finally, a study published last year in the Quarterly Journal of Experimental Psychology suggests a simple way to disrupt the voluntary memory recollection that gets songs stuck in your head: chew a piece of gum.

            Think I'll try the gum and thinking of another song before going through that ordeal.

      • ...then it will be gone.

        The song or your mind?

    • Try the mayonnaise jar under Funk & Wagnall's porch.

  • And nothing of value was lost (Score:4, Insightful)

    by Anonymous Coward on Monday November 27, 2017 @11:29AM (#55629685)

    N/t

    • Not necessarily... I mean, if you owned them and sold them before the whole thing tanked you'd be in a pretty good place right now.

      • Bitcoin is not so new anymore.

        I think it's going to die the same way BSD and Apple have been dying for decades now.

      • Re:And nothing of value was lost (Score:4, Interesting)

        by guruevi ( 827432 ) on Monday November 27, 2017 @02:46PM (#55631333)

        On the other hand, if you had them, the remaining bitcoins wouldn't have as high of a value either, only the bitcoins in circulation are actually valuable, losing a bitcoin actually increases the overall value of the remaining coins. The problem with the bitcoin-type places is bit-rot. Eventually, over long enough periods there won't be enough bitcoins anymore to go around because they've all rotted away (hard drive failures, owner death, loss of passwords etc) you won't have enough to even divide up.

        • Never considered this. That's actually a solid point.

          • Never considered this. That's actually a solid point.

            No, it's not, unless you are thinking about it in pure theoretical terms.
            The first issue is "over long enough periods" - this could mean anything from "a week from now" to "the cold death of the universe". Any statement involving time tends to become valid "over long enough periods".
            Then, losing active bitcoin is indeed a thing, and it's indeed pushing bitcoin value up, but that's not a cause, it's an effect of the overall total amount of bitcoin being limited, with a known upper limit (21-something million

          • Pfft -- what's the big deal? They'll just mint new bitcoins (with slightly less copper each time).

        • you won't have enough to even divide up.

          Bitcoins can be divided. So as the value continues to increase, we can use bit-dimes, bit-pennies, and even smaller units. It will be like the
          Zimbabwean dollar [hughwhalan.com], but in reverse.

          • Re: (Score:2)

            by guruevi ( 827432 )

            It can only be divided to 8 decimal places. Given at 6 decimal places, you're already at USD 0.01, it's not that far off from being indivisible, it would already be close to useless for some penny stock trading (which can be as low as USD $0.0001 per trade).

            Sure you can update the protocol and clients but as we've seen, any sort of "split" like that, even when it made sense (because BTC will collapse at the current transaction rates) has been met with serious resistance.

    • ...for two reasons (Score:4, Insightful)

      by Roger W Moore ( 538166 ) on Monday November 27, 2017 @02:12PM (#55630989) Journal
      While I get your implied meaning the other reason you are correct is because these bitcoins are not lost. At some point it is highly probable that the encryption used will become easily breakable on some future, possible quantum computing, device. At this point the coins can be recovered...although the entire encryption behind bitcoin will also be undermined so they will probably be worthless!

  • Incorrect subject (Score:3, Interesting)

    by Anonymous Coward on Monday November 27, 2017 @11:33AM (#55629717)

    More like 4 million coins they just assume are lost forever. I'm not sure why everyone assumes Satoshi's original 1 million coins are just lost forever. I'd say he's likely just holding them and playing the long game on it. BTC is still fragile, and if he started cashing them in, people would likely freak out and prices might start plummeting, possibly sending BTC into a death spiral. If one really believes in the long term success of BTC, they'd hold those coins until BTC is a true success, is in use everywhere, and is as ubiquitous as credit cards. Then you can cash them in, people would say "holy shit, those coins WEREN'T lost" but it would have relatively little effect on bitcoin itself.

    Likewise with many of the other "out of circulation" coins. I wouldn't be surprised if a lot of those people are just holding them. I'm sure some of it's lost, but I think 4 million is probably wildly overestimating.

    • . BTC is still fragile, and if he started cashing them in, people would likely freak out and prices might start plummeting, possibly sending BTC into a death spiral.

      I would think that the idea that around 30 billion dollars could just be lost would freak people out more

  • Those numbers imply 17% to 23% of existing bitcoins, which are today worth around $9,700 each, are lost.

    I guess that's one way to drive up the "value" of bitcoins. Fixing the money supply to a finite resource (real or calculated) is by and large not a good idea. Especially one that can be easily lost.

    • Fixing the money supply to a finite resource (real or calculated) is by and large not a good idea

      That depends on your purpose. It's a good idea if you mostly use it for storing your wealth, and doing occasional transactions. It's not a good idea if you want to run a national economy on it. I don't think anybody is trying the latter.

      • > It's not a good idea if you want to run a national economy on it. I don't think anybody is trying the latter

        Bitcoin is like lupus; it looks different every time it's promoted.

        Indeed, it was not so long ago (even in Internet time) that proponents were claiming you could use Bitcoin alone to get by in the world.

        >It's a good idea if you mostly use it for storing your wealth

        Sticking with the specific case of Bitcoin, and not the general case you appear to be making, no, no it is not. Mostly because Bit

        • Mostly because Bitcoin has no value beyond speculation

          Shifting the goal posts, I see.

          every speculation bubble in history has had more people lose than win trying to time that.

          The speculation bubble of gold has been surviving for thousands of years.

          • Ahh, so you weren't making a general case and you're a Bitcoin lunatic.

            Noted.

            • So a follow-up...
              Think when the bubble pops it's all going away? Or do you think it will return to a baseline value and stabilize?

              • Re:Supply and demand (Score:4, Interesting)

                by Baron_Yam ( 643147 ) on Monday November 27, 2017 @01:04PM (#55630439)

                >Think when the bubble pops it's all going away? Or do you think it will return to a baseline value and stabilize?

                It's difficult to tell. It seems there's an unending stream of new kids finding this 'amazing new technology' and jumping in enthusiastically but uncritically - and a portion of those never get past the enthusiasm stage.

                Then there's the 'get rich quick' people, who understand nothing at all about the system but can parrot talking points... they're the ones who would most likely move on to the next scheme when Bitcoin crashes in value.

                Still... I'm not so sure there won't be a significant number of computers running full Bitcoin nodes and continuing the original blockchain for a long, long time, if only for some obscure geek cred. And those remaining users could still use it as currency.

                A small enough group of users doing that and it'd probably have whatever (likely insignificant) value they assign to it at the moment, essentially rendering it even less stable than it is now. You know, "Hey, Joe... can I have a slice of pizza for a bitcoin???"

                • You know, "Hey, Joe... can I have a slice of pizza for a bitcoin?"

                  For the first ever so-called official transaction, 10K Bitcoins were exchanged for two pizzas.

                  So even if Bitcoin goes down to the value of a slice of pizza, assuming eight slices per pizza, that still means Bitcoin would be worth 625 times as much as the first transaction.

                  • >that still means Bitcoin would be worth 625 times as much as the first transaction.

                    To the few using it - in such a scenario there'd be pretty much no place left to use Bitcoin, so it'd be like trading homemade poker chips amongst a small group of friends.

                • Still... I'm not so sure there won't be a significant number of computers running full Bitcoin nodes and continuing the original blockchain for a long, long time, if only for some obscure geek cred. And those remaining users could still use it as currency.

                  Bitcoin will never completely go away after it crashes. There will always be a new crowd of suckers to fleece.

                  Just at look at gold and silver investment scams. Those have been around in various forms for centuries (literally). You can always find some n

          • Gold (Score:2)

            by sjbe ( 173966 )

            The speculation bubble of gold has been surviving for thousands of years.

            Which has a lot to do with why we don't base our money supply on the gold standard anymore.

            • Which has a lot to do with why we don't base our money supply on the gold standard anymore.

              I agree, but people are using gold as a safe haven to store wealth, which was my point.

              • No, people *think* they're using gold as a safe haven to store wealth.

                Historically, gold was an excellent material for currency. Many people have conflated this to mean that gold has intrinsic, universal value. It doesn't.

          • It worked pretty well for that length of time because more was being mined to make up the difference of increasing wealth and it's still being mined at a thousand tons a year. Once bitcoins are mined out the parallel stops working on a far shorter time scale.

            • Re: (Score:3, Interesting)

              by religionofpeas ( 4511805 )

              We're not mining any new van Gogh paintings, and they are still pretty valuable.

              • Re: (Score:2)

                by Dog-Cow ( 21281 )

                Bitcoins aren't art. There is literally no value to a bitcoin if no one else values it. You may never be able to sell that painting for even a fraction of its purchase price, but you'll still have a painting to look at.

                • There is literally no value to a bitcoin if no one else values it.

                  Correct. Same is true for regular money. To a large extent, it's also true for gold. Gold has some utility value, but most of the price is just expectation that others will value it as much as you do.

                  The opposite is true as well. As long as other people are valuing it, why should I not do the same ?

                  you'll still have a painting to look at.

                  If you just wanted to look at it, you can have a decent artist paint you a good replica for a small fraction of the price. You can't do that with bitcoin.

                  • If you just wanted to look at it, you can have a decent artist paint you a good replica for a small fraction of the price. You can't do that with bitcoin.

                    Well, I could sell you one Dogecoin for one Bitcoin. They're not the same, but it's a pretty good replica since they're both crypto-currencies based on blockchain technologies.

      • Risky store of wealth (Score:4, Informative)

        by sjbe ( 173966 ) on Monday November 27, 2017 @12:05PM (#55629971)

        It's a good idea if you mostly use it for storing your wealth, and doing occasional transactions

        Bitcoin as a store of wealth? Maybe if you like a HUGE amount of risk on a highly speculative asset.

        It's not a good idea if you want to run a national economy on it. I don't think anybody is trying the latter.

        Listen to bitcoin advocates sometime. More than a few would like to replace all fiat currencies with bitcoin or something similar. Their arguments are largely unconnected to economic reality but they seem to believe them all the same.

  • This is only sort of a problem.

    Much like we don't know exactly how much wealth is hiding under someone's mattress (or stored in the form of precious items that could be sold at any time) yet we still manage to find a value for currency that in modern times more or less represents a fraction of GDP... Bitcoin will find a value regardless of how much is lost.

    If there's confidence a certain percentage of tokens have become permanently inaccessible, their 'confirmed' loss from the Bitcoin economy will encourage

  • It feels like late 2000 again! (Score:5, Insightful)

    by Anonymous Coward on Monday November 27, 2017 @11:41AM (#55629775)

    It's beginning to feel a lot like late 2000 again. Those who were around then will remember how much hype there was around technology, and how the various stock market indices were constantly hitting new highs. Profit was the last thing that businesses were thinking about; it was all about growth. Even the most outlandish ideas were taken seriously. The future outlook was nothing but pure optimism.

    Then it all came crashing down just a few short months later.

    Just look at the outrageous valuations of so many Silicon Valley companies. Look at this cryptocurrency nonsense, where performing a single transaction requires more energy than an average American home uses in a month. Look at the nonsense coming out of moz://a, especially the silly Rust programming language and the terrible Firefox 57 release.

    There are a lot of people who will be in for a very rude awakening, and it could very well be happening much sooner than they expect!

    • It's beginning to feel a lot like late 2000 again.

      In the year $2000, Amazon was trading for $100 a share, and Apple was going for $4.95

      • Re: (Score:3, Insightful)

        by Anonymous Coward

        and what was pets.com trading for? I think that's more along the lines of what he was thinking.

    • you mean late 90's? Tech bubble popped Aug 21, 1999.

    • Re: (Score:2)

      by dj245 ( 732906 )

      It's beginning to feel a lot like late 2000 again. Those who were around then will remember how much hype there was around technology, and how the various stock market indices were constantly hitting new highs. Profit was the last thing that businesses were thinking about; it was all about growth. Even the most outlandish ideas were taken seriously. The future outlook was nothing but pure optimism.

      Then it all came crashing down just a few short months later.

      Just look at the outrageous valuations of so many Silicon Valley companies. Look at this cryptocurrency nonsense, where performing a single transaction requires more energy than an average American home uses in a month. Look at the nonsense coming out of moz://a, especially the silly Rust programming language and the terrible Firefox 57 release.

      There are a lot of people who will be in for a very rude awakening, and it could very well be happening much sooner than they expect!

      Many tech companies seem incredibly overvalued, but their business model may not be "make/do product/service, obtain currency". Some companies seem to exist only to stay afloat long enough for Google, Microsoft, Facebook, Apple to acquire them.

      Other companies (particularly Tesla) seem like they may remain afloat regardless of the underlying financials. Giving money to Tesla may have a better $ / "environmental return" compared to entities like Greenpeace, the World Wildlife Foundation, or the Sierra C

    • Look at the nonsense coming out of moz://a, especially the silly Rust programming language and the terrible Firefox 57 release.

      That's a very nice attempt at hijacking a story with a HUGE non-sequitur.

  • Moral of the story (Score:4, Interesting)

    by DeplorableCodeMonkey ( 4828467 ) on Monday November 27, 2017 @12:46PM (#55630307)

    A totalitarian government that wants to inflict maximum damage to cryptocurrency without firing a shot would just have to work on a worm that would target the users' wallets and make them inaccessible. The number of users that would have gone through the steps to enable recovery would probably be shockingly low.

    • Re: (Score:2)

      by mu22le ( 766735 )

      The bitcoin market is pretty shallow; if a state wanted to crash it, they could just buy a few millions of them, and then sell everything at once.

    • I'm not very familiar with it, but it sounds like you can sell fractional coins with pretty high fractional amounts. And that's before we talk about forking or just plain new currencies.

      When the gov't decides to crack down it'll be in the tradtionall fashion, they'll arrest a bunch of drug dealers and money launders (and maybe a few ransomware authors) and that'll tank the price. The value of bitcoin is, like it or not, underpinned by illicit goods. Eventually it'll get too big for it's britches and that

  • How is it solved? If there is maximum of 21,000,000 BTC to be issued... and people keep forgetting wallet passwords and loosing storage drives... Then while the amount of issued BTC is limited the amount of BTC accidents is unlimited.

    I see it as unsustainable due to human error.

    Or can we re-e-print new BTC money?

    • You can divide the remaining bitcoin into smaller units.

      • Re: (Score:2)

        by swb ( 14022 )

        They say this and it makes intuitive sense to me (the way a dollar is made up of 100 cents), but if I stop and think about it, it reminds me of currency devaluation as means of solving hyperinflation. You can just move the decimal point and call a $100 bill a $1 bill, but it doesn't solve the underlying problem.

    • >How is it solved?

      It's just numbers... so you move the decimal place over and deal with smaller units. There are lots of issues with Bitcoin, this isn't one of them.

      >Or can we re-e-print new BTC money?

      BTC is controlled by whoever owns enough of the network verification capacity to decide which transactions are considered valid and which are not, tempered by a need not to do anything that destroys the underlying confidence of the network users.

      At least, that would work for taking control of abandoned

    • Re: (Score:2)

      by Elixon ( 832904 )

      OK, but how will we know that some bitcoins are practically lost if they are still on the books?

      There will be less BTC in practical circulation which will naturally keep nominal prices of goods pressed down since the BTC will go up virtually indefinitelly... I mean, you buy a flat for 1k BTC and due to this in a year it will cost 0.5k BTC... so it may impact consumption because people will prefere to keep virtual digital numbers on disk drives rather then consume goods... which is not good...

      I am not an eco

  • Lost in the dump - seriously. (Score:3)

    by saccade.com ( 771661 ) on Monday November 27, 2017 @01:58PM (#55630863) Homepage Journal
    There is a laptop lost in a UK garbage dump [cnn.com] with 7,500 BTC on it. Never getting those back...

  • As I said before [slashdot.org], "All bits, no coin."

  • ... your mother can't find it. Did you ask your mom where you left your Bitcoins?

  • Forever is a long time... (Score:3)

    by slew ( 2918 ) on Monday November 27, 2017 @02:50PM (#55631369)

    At some point in time (with the rapid advance of quantum computing), I suspect it may become feasible to perform a salvage operation on the wallet keys to recover the coin...

    Of course "guessing" a 256-bit key is impractical, but I wonder how many of these "lost" coin are protected by mini-private keys that have somewhat weaker than average and might be amenable to a small quantum computer attack.

    Also, although I suspect that some of the coin have never been spent, those that have been spent, it might be interesting to forensically attempt to track them and look for potential weaknesses in the generation of the key itself (many random number generators in wide usage have quite a few weaknesses)...

    • Re: (Score:2)

      by JeffSh ( 71237 )

      the problem becomes not just guessing the privkey but the resources it takes to attempt a transaction on the network. you can't verify the privkey without attempting a transaction, so an attack on the priv key of a bitcoin address is difficult for that reason.

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