Every single year, millions of dollars’ worth of bitcoin – together with other digital assets – are lost. It’s a common crypto problem: As people tend to forget the private keys that give them access to their crypto investments, countless coins — for example Bitcoin, Ethereum, Litecoin, Dogecoin, Solana — have been lost. As much as 20% of the entire supply of Bitcoin might be lost owing to lost private keys.
The term ‘Lost’ Bitcoin refers to Bitcoin or cryptocurrency which has been misplaced, lost physically or sent to the incorrect wallet address. Within the Bitcoin blockchain, there is really no way to get back Bitcoin which has been lost or misplaced as unalterable Bitcoin ledgers make all transactions final and also non-refundable.
What Are The Common Ways That Bitcoins Get Lost?
When first becoming involved in Bitcoin trading, purchasing and selling, there are some quite common ways that a person can lose their Bitcoin. More frequently than not, it is human error which results in an individual losing their Bitcoin.
Bitcoin Sent To The Incorrect Address
Bitcoin trading and cryptocurrency protocols are not reversible by nature which means that transactions may not be cancelled or reversed after it is initiated. This means that sending Bitcoin to the incorrect wallet address or user can lead Bitcoin being lost for the sender and a surprise boost of Bitcoin for another unsuspecting user.
It is always very important to double check the wallet address which you are sending your Bitcoin to in order to ensure that it is going to the correct place.
Improper Storage Of Bitcoin
Bitcoins are often lost owing to how people use and store them. For instance, someone using a Bitcoin exchange. While an individual holds and stores their Bitcoin in an online exchange, the exchange gains ownership over the cryptocurrency. This is why a reputable exchange, such as Independent Reserve, is extremely important when looking for somewhere to store Bitcoin in case of cyber-attacks, hackers or dubious exchanges stealing users’ assets.
Although cold wallets might seem like the better option owing to the online risks of owning a hot wallet, a major contributor to users losing their Bitcoin is via misplaced cold wallets! If users are looking to have a physical, disconnected wallet of Bitcoin, make sure that it is kept safe and secure.
Where Do The Missing Coins Go?
Unlike fiat currencies such as the US dollar, Bitcoin was designed to have a restricted supply so you need to know how to invest in cryptocurrency to acquire them. While more bank notes can constantly be printed by the Federal Reserve or other similar institutions across the globe, new Bitcoin cannot be released when all 21 million coins have been mined.
Lost and destroyed Bitcoin shrinks the currency’s maximum supply further. A total of 4% of available Bitcoin is lost each year. In spite of Bitcoin being designed with a limited supply of 21 million coins, it is estimated that a maximum of only 14 million bitcoin will ever circulate owing to the rate at which coins are lost.