Bitcoin has been around for more than a decade, and many people have adopted this virtual coin as an alternative to fiat money. Currently, Bitcoin continues to be one of the most popular digital currencies held by investors in the entire world. Bitcoin functions on a peer-to-peer decentralized network that has many advantages, including access to a global market and improved security. The crypto king has become a phenomenon in the last decade, making plenty of people millionaires, while other Bitcoin owners have missed out on this possibility. Why did this happen? Well, because they lost access to their accounts. In fact, nowadays, more than $100 billion in Bitcoin is estimated to be lost.
Let’s find out more information about how much Bitcoin is lost around the world.
What is a lost Bitcoin?
A lost Bitcoin is any Bitcoin that its current owner no longer has access to. But how can Bitcoin get lost? Well, that can happen in plenty of ways. Usually, Bitcoins are stored in crypto wallets that come in different forms. For example, you can choose between hardware and software wallets, custodial or non-custodial ones, and so on. However, regardless of the wallet you choose to use, there is a possibility that your digital currencies will get lost.
Unfortunately, when a Bitcoin is lost, it becomes quite irretrievable to try to re-access it. Of course, the digital coins can be misplaced temporarily, as you might forget to which wallet you have transferred it. However, only when you cannot access the wallet and have completely lost track of your virtual coins’ location can you say you have permanently lost access to your tokens.
When the crypto sector boomed in 2021, several people reported that they lost access to their Bitcoin wallets. Some of these people invested in Bitcoin before its value increased and hit the double or triple figure. For example, many individuals bought it back in 2009, when the value of Bitcoin was little, worth almost nothing, while others put their money into the crypto king in the early 2010s. However, it was in 2013 when Bitcoin finally passed the hundred-dollar mark, and then it hit a consistent four-figure in 2017. At that time, people frantically tried to dip into their old Bitcoin wallet keys, although only the year 2021 showed how much Bitcoin had been lost.
A famous case of lost Bitcoin was that of Stefan Thomas, a software developer who lost access to his Bitcoin wallet. Then, he discovered that his wallet of 7,000 BTC could be worth $320 million in 2021. Stefan bought his digital currencies in 2011 when one virtual coin was less than $20. If Stefan still had access to his wallet, then he would have a substantial investment.
Thomas kept his Bitcoins in an IronKey flash drive. This type of drive requires you to enter a password to be able to have access to the data stored. Unfortunately, Thomas did not remember this password, and this is how he lost access to his wallet. No matter how hard he tried to remember it, he didn’t manage to recover access to his wallet. Up to this day, Thomas has not succeeded in recovering his wallet.
How can Bitcoin get lost?
When you forget your bank or social media password, there are ways in which you can change or recover your passwords, which enable you to access your wallet. This is possible because these online platforms are operated and owned by centralized organizations. These organizations have access to your account and can allow you to recover your credentials.
However, that is not the case with the Bitcoin blockchain. Bitcoin is a decentralized asset, and no organization has access to the information that is stored within the platform. Additionally, there is no centralized data center or server, so no one can help you if something goes wrong.
The data on a decentralized network is spread across numerous nodes within the platform. But no one has the capability or authority to delete or alter data. Why does this happen? Because the entire point of decentralization is to give the control to the users. Of course, this doesn’t mean that anyone can do what they want within the blockchain, but users can have their say and store their own data on the network.
Regarding crypto wallets, everyone is for themselves in the decentralized network. So, if you lose your PIN, wallet password or seed phrase, that will be on you. However, there is one exception to the rule in case you are using a custodial crypto wallet, which, in the majority of cases, is offered by centralized exchanges. These types of wallets are looked after by custodians, which means that they also guard the private keys. This is why you will not be the one who needs to store your wallet’s sensitive information.
How is Bitcoin lost?
Lost Seed Phrase and Private Key
Whether you use a hardware or a software wallet, you will not be able to conduct transactions if you don’t have a private key. But if you lose your private key, you will no longer be able to move or sell your Bitcoin funds, meaning they will remain stuck in your wallets. However, you could use a backup piece of data, known as a seed phrase, to retrieve your key and access your wallet again. But without your seed phrase and private key, your wallet access is irretrievable. Over the years, plenty of people lost access to their digital currencies because they didn’t find their seed phrase or private keys, which meant that their holdings had been lost forever.
Lost hardware wallet device
If you keep your Bitcoins in a hardware wallet ( a physical device), then losing the device itself is the one that will spell trouble. If you don’t have your wallet to hand and don’t know your seed phrase, your Bitcoin funds can be irretrievable.
However, there is some good news in all these bad scenarios. For example, if your hardware wallet provider offers a replacement for stolen, lost, and damaged wallets, then you might be eligible for a replacement.
If you want to invest in Bitcoin, it is imperative to keep the safety factor in mind and store it somewhere safe.
