Study Reveals at Least $26.4 Billion Worth of Bitcoin Lost Forever
Based on research conducted by cryptocurrency-focused electronic forensics firm Chainalysis, at least 2.78 million bitcoins are forever lost on the Bitcoin blockchain network. This amount could even be as large as 3.79 million bitcoins.
At the current market price, 2.78 million bitcoins are equal to about $26.4 billion, provided that the price of bitcoin has risen almost 37 percent, from $6,000 to $9,500 from the previous month.
Using empirical data supplied by the transparent Bitcoin system, the Chainalysis study team calculated the number of bitcoins which are “from circulation.”
It must be noted that missing bitcoins do not account for stolen money on cryptocurrency trades and trading platforms. Technically hackers that successfully sneak cryptocurrencies from centralized systems have access to the stolen tools and consequently can recirculate their bounty.
In an interview with Fortune, Kim Grauer, a senior economist at Chainalysis, stated that the sum of lost bitcoins is often disregarded in assessing the market cap of the cryptocurrency. But, Grauer highlighted that the present market cap of bitcoin doesn’t consider the bitcoins which are no longer accessible on the blockchain.
Hence, the supply of actual bitcoins which are circulating within the current market is reduced, even though the requirement for your cryptocurrency is increasing at an exponential pace.
Grauer unraveled the non-inclusive marketplace samples as follows:
“That is a very complex question. On the one hand, direct calculations about market cap do not take lost coins into consideration. Considering how highly speculative this field is, those market cap calculations may make it into economic models of the market that impact spending activity. Yet the market has adapted to the actual demand and supply available – just look at exchange behavior. Furthermore, it is well known monetary policy procedure to lower or increase fiat reserves to impact exchange rates. So the answer is yes and no.”
Onwards and Upwards
If we believe that the true quantity of bitcoins circulating the worldwide marketplace is significantly lower compared to the maximum source of bitcoin of 21 million, then after the limit is attained prices should grow steadily.
Another Chainanalysis spokesperson demonstrated that the implementation of this Bitcoin Cash hard fork in August supplied more clarity and improved the precision of the analysis findings. The hard fork triggered dormant wallets to run transactions to move or sell-off Bitcoin Cash and consequently provide more information points.
Grauer also mentioned that the answer from many figures in the bitcoin sector to whom Chainalysis disclosed their findings came as a surprise to the group since the analysis raised a significant question when it comes to bitcoin’s deflationary policy.
“Primarily, we jumped our findings to a couple individuals, and they all had different responses about how unexpected that the figure was. However, what I found many surprising/interesting was how when you unpack what it means to be ‘missing’ things get much more perplexing,” Grauer added.