You’ve likely heard “not your keys, not your coins” before, but what happens when no one has the keys? Not you, not the exchange, no one. Lost Bitcoins, like lost treasure, has time and time again slipped through the fingers of their owners, now far beyond the realm of retrieval and lost to all forever.
What Happens To Lost Bitcoins?
When bitcoins are considered lost, they become inaccessible or are unable to be spent. As bitcoin transactions are irreversible once they have been added to the Bitcoin Blockchain, if mistakes are made there is no way to recover access to the locked funds.
In this instance, it’s different to when someone has their funds stolen or “lost”. This is because although they may have lost their bitcoin, another person (or thief) still has the ability to spend them. As such for this article we’re only referring to bitcoin that are forever and permanently lost to everyone.
Some of the most common ways that bitcoin owners have forever lost access to their bitcoin is through simple human error rather than something complex you might see in a movie. These include:
- Loss of the private keys (via natural disaster, accident, death etc)
- Loss of the password or login credentials that encrypts the private keys
- Incorrect bitcoin transaction due to wrong locking script or sending to an inaccessible wallet
How Many Bitcoins Are Lost?
There is no exact way to know how many bitcoin are irreversibly lost. This is because coins stored in a wallet address could be lost or inaccessible, but no one would know. To an outside observer they would just appear to be staying put in their wallet forever. Most estimates conclude that around 3-4 million bitcoin will never be recovered or moved.