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Thursday, June 7, 2018

The shocking amount of cryptocurrency lost forever - in wallets no one has access to...

The amount of cryptocurrency lost forever is staggering.  One of the things that brings strength to cryptocurrency also has it's downsides. It's empowering that no government can order a wallet unlocked, and only the holder of the private key can control access to it - that is, until that private key gets lost, or the owner takes it to their grave.

NY based Chainalysis, an analytics firm, recently published a study stating nearly 4 million bitcoins are lost forever. The study points to people who bought a few out of curiosity years ago, maybe just $20 worth at the time - and miners from the days when bitcoin was only worth pennies or low dollar amounts.

On this topic I have a personal friend who is among some of the early Bitcoin miners who made this mistake, he explained to me:

"I started mining Bitcoin in 2012 - not as anything serious, and not even with a very good mining rig - I had earned about 30 BTC worth about $5 bucks each - so my wallet was valued at about $150 bucks.

My private key saved on 1 laptop, I thought nothing of how risky that was - how closely does anyone really guard $150 bucks?

That laptop was stolen out of my car trunk parked in downtown San Francisco - and with it, I lost access to that wallet forever.  At the time I was only mad about losing the laptop itself, but now that's the least of it. 

It still haunts me today but the worst was December 2017 when it amounted to losing about a half million dollars."


At today's price, it's still worth over $200,000.  While he's taking it with a grain of salt and trying to laugh at his misfortune, I also can't help thinking of those tormented forever - some people never come to grips with a massive loss, last year we even covered a story titled "My brother killed himself because of bitcoin" (link).

Now that the price of Bitcoin is so much higher than it was back in 2012 - people are guarding their private keys like their life depends on it - and they're literally correct.

Just last month crypto billionare Matthew Mellon died of a heart attack - his private keys seemingly lost with him.  He had told people he printed and placed his private keys in secure bank valuts around the world - but it appears to have been something he was just planning on doing, and never actually did. His family has stated they recieved his belongings from his bank safe deposit boxes - no private keys were there.

Lessons to learn - have your private key saved in multiple secure places.  Include instructions to access them in your will in the case of death.

For those of us living, oddly enough this has a positive effect on the market.  Coins locked into wallets people don't have access to means these are coins that can never be sold - so the effect on the market is the same as someone HODLing, forever.

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Author: Ross Davis
E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM
San Francisco News Desk