About 18.6 million Bitcoins have been mined as of January 2021. Would it shock you if I said that a large chunk of these Bitcoins is completely unusable or lost?
Bitcoin is entirely digital. In other words, you can’t touch it. You can’t actually put a Bitcoin in your pocket or accidentally send it through the wash. So how exactly can Bitcoin be lost?
Although this might be surprising, about 20% of all mined Bitcoin has been lost by its holders. That translates to approximately 3,720,000 Bitcoins or $119,040,000,000 USD (that’s $119 Billion). In other words, it’s a lot of money. But if Bitcoin isn’t something you can physically hold, how could that many coins just … disappear?
Something you often hear about the internet is that everything leaves a trace, so nothing can truly go away. And while there is a trace of every Bitcoin in existence, some Bitcoins can be rendered useless.
This “loss” of cryptocurrency usually occurs in one way. To provide some context, you should be aware of cryptocurrency wallets. Put very simply, you can create a digital wallet to store your Bitcoin. Cryptocurrency wallets are each unique, with their own personal addresses. Private keys and recovery phrases further protect most wallets.
These keys and phrases shouldn’t be kept online or in any kind of notes application that could be accessible to someone trying to hack into your wallet. Instead, you should keep this private key and recovery phrase written down on a piece of paper (or other physical item) that you can store securely and prevent from being destroyed.
Unfortunately, some people have been unable to keep track of this important paper. And without their private key and recovery phrase (despite still having their wallet addresses), they no longer have access to their coins at all. This can be especially tragic if you have large amounts of Bitcoin in storage. If you lose your password, you lose the ability to retrieve your coins, no matter how many you have. This knowledge should incentivize you to make sure your passwords are secure, and you’re aware of where they are.
You might be wondering if there is any way to recover these coins. When you live in a world of fiat currency, you often grow used to having insurance, or being able to recover money that is stolen from you or misplaced somehow in the system. With Bitcoin, this isn’t the case.
Bitcoin’s inability to be accessed without its address and password is part of what makes it so secure. But, because Bitcoin isn’t backed by any kind of government or group, there is no real form of insurance. You and you alone are responsible for storing and managing your coins. So when keeping track of your passwords, make sure they are in a place that is memorable, safe, and hard for others to access.
Disclaimer: The information and views supplied on the Coin Cloud blog are for educational and entertainment purposes only. We are not financial advisors, so please do your research and consult with a trusted financial specialist before investing your money.
Founded in 2014 in Las Vegas, Nevada, Coin Cloud is the leading digital currency machine (DCM) operator. With over 4,500 locations nationwide, in 48 states and Brazil, Coin Cloud operates the world’s largest and fastest-growing network of 100% two-way DCMs, a more advanced version of the Bitcoin ATM. Every Coin Cloud DCM empowers you to quickly and easily buy and sell over 40 cryptocurrency options with cash.
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