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How Many Bitcoins Are Lost? 2023 Statistics Reveals This

 

By Nerly Shammah Aug 31, 2023

 

Around 10-25% of the total bitcoin supply as of 2023 is presumably lost. 

 

 

Bitcoin's network design some say is a curse, the reality of having full control of one's wealth is that despite enjoying the security at the network level, the ultimate determinant of one's wealth protection is the management of one's entry passes - the private keys. 

 

Like many cryptocurrencies and assets, each address is accompanied by a private key or keys, these keys are the only way one can access the funds contained in a specific Bitcoin address and are typically obtained upon the creation of the wallet.

 

Most channels to crypto assets management - more commonly called crypto wallets - do not offer key recovery services as they mostly serve as non-custodial wallets, so a user is typically responsible for the full ownership and control of all assets contained in each crypto address. 

 

Fun Fact: crypto addresses are also known as "public keys", they are blockchain's version of account IDs. 

 

According to a 2018 study, about 3.7 million are considered lost or stranded in a dead wallet. The study attempts to distinguish between long-term Bitcoin investment wallets from transactional and speculators wallets. 

 

Similar to Glassnodes estimates, 10-25% of bitcoin supply is considerably lost given that these bitcoins have not been moved for a long time. 

 

Of course, these statistics may not be 100% accurate on the surface level but when we begin to factor into unreported recent wallets, the numbers could be significantly higher. It is expected that a clearer picture will be painted in coming years as more of these wallets remain dormant, not receiving or moving out bitcoins. 

 

The Cost Of Bitcoin's Decentralized Finance

 

Although not a lot of people are familiar with this, decentralized finance had always started with bitcoin, but of course, without the high and unsustainable yields and LPs swaps present on Ethereum. 

 

Notwithstanding, the concept of self-managed finance which is effectively what decentralized finance is all about started with bitcoin as the network and currency provided a medium of wealth management that was void of government control or any centralized financial institution. 

 

The cost of this however is the end-user risk of poor asset custody, the mismanagement of wallet private keys and even the careless use of keys to interact with various third-party services. 

 

These events have led to numerous cases of lost crypto assets, that span far wider than the Bitcoin network. Some notable media houses have criticized the Bitcoin network and the narrative of  "being your own bank" all putting crypto enthusiasts in a position to question their own choice of investments, is it really worth the risks? 

 

While there are numerous key recovery services out there with various techniques to recover lost crypto assets, the risks still remain incredibly high. 

 

A popular crypto wallet "Ledger" was in fact criticized in the past by crypto users for introducing a key backup system to its wallet infrastructure causing the company to roll back its move to offer the service. 

 

That said, numerous blockchains however currently have systems in place with more layers of key security, particularly allowing individuals who have been hacked to recover their accounts. A prominent example of this blockchain is Hive, a delegated proof of stake blockchain with a vast number of functioning DApps but most popularly known for hosting top web3 social media applications. 

 

Notwithstanding, the risk remains that bitcoins and most crypto assets cannot be effectively managed by individuals given the design of its key systems which contributes to the high security of the chains but comes with a great cost of being highly difficult to manage.