According to the latest Coin Metrics report, more than 1.6 million bitcoins have been lost forever, either through duplicate transactions, unclaimed rewards, or thefts. Despite the report offering one of the most conservative estimates as to how many coins are lost, it still showed that Bitcoin is getting scarcer with each passing day.
Calculating Bitcoin’s circulating supply much harder than it looks
While Bitcoin’s whitepaper only touches on the topic of supply, one of its biggest value propositions is its scarcity. With a supply capped at 21 million coins that halves every 4 years, Bitcoin doesn’t let anyone forget its scarcity.
A report from Coin Metrics showed that the world’s largest cryptocurrency might be even more limited than we think it is. The report, which set out to calculate Bitcoin’s circulating supply, found that it was significantly smaller than it ought to be.
This time last month, the network celebrated a major milestone as block 600,000 was mined, putting Bitcoin’s circulating supply at around 18 million BTC.
However, further inspection showed that the actual supply was much lower than that.
When added together, lost coins amounted to more than 1.6 million, pushing Bitcoin’s actual supply down to just over 16.4 million BTC.
Getting to that number wasn’t easy, as the report had to divide the lost bitcoins into two groups—provably lost and probably lost.
World’s largest cryptocurrency scarcer than ever
Coin Metric’s research found that the provably lost coins were the genesis coins, duplicate transactions, unclaimed mining rewards, and OP_return outputs.
Bitcoin’s first block, called the genesis block, contains a transaction with a 50 BTC output which wasn’t included in Bitcoin’s ledger, while the only two instances of duplicate transactions on the network resulted in 100 BTC being removed from the blockchain. Just over 3 BTC were embedded into the blockchain as messages, effectively making them unspendable forever.