Over $20 Billion in Bitcoin Is Missing. Where Did It Go?

By Casey Hynes

When Bitcoin or other cryptocurrencies go missing, we often think of exchange hacks and scams as the most likely culprits. But a mundane reason is probably more prevalent: the owners simply lost them.

According to research from blockchain forensics firm Chainalysis, about 3.79 million Bitcoin have been lost, including the million owned by the currency’s elusive creator, Satoshi Nakamoto. Those missing coins are currently worth about US$24.6 billion, or more than the GDP of Iceland.

Losing Bitcoin is easier than you’d think. Greg Bovard, an entrepreneur based in Iowa, for instance, lost access to Bitcoin he and his then-fiancée bought in 2012.

“I’ve always been interested in investing beyond a 401(k) and your standard [individual retirement account] kind of stuff,” Bovard told LongHash. He estimates that he invested between US$300 and US$500 initially, though he doesn’t recall the exact amount.  

“It’s a small enough amount that it doesn’t really matter, and if something awesome happens — which it probably will — then, fantastic,” he said. “And if not, whatever.”

In terms of Bitcoin’s value, something fantastic did happen. By December 2017, the cryptocurrency peaked above US$19,000. Even someone who had made a small investment in 2012, as Bovard did, would have stood to make a huge profit. At its highest point in 2012, Bitcoin was worth less than $13. Bovard ended up taking a lot of his money out of crypto, but if he had left the full amount in, his $300-500 investment would likely have been worth between $400,000 and $800,000 or even more when Bitcoin hit its December 2017 high.

Unfortunately, Bovard never saw his gains. In the years following their Bitcoin investments, he and his fiancée split up, and she later died. Because the purchases were made through her accounts, Bovard didn’t have any of the information necessary to access the investments. While helping her family sort through her personal effects, he found a small black notebook in which she had jotted some notes about their Bitcoin buys, but not the crucial log-in credentials he’d need to find out what their coins were worth.

Bovard is far from the only Bitcoin investor who has seen a potential fortune, or at least a healthy return, slip out of reach following an untimely death. Crypto assets are held in digital wallets that are protected by private keys. Unless a person has shared their wallet and key information with a trusted friend, relative, or advisor, their next of kin likely has no way of accessing those investments. According to figures from Chainalysis, roughly 17-23% about 22% of the total supply of Bitcoin is lost or out of circulation.

And death isn’t the only cause of lost Bitcoin. Seeking Alpha writer Martin YK Li notes that crypto coins are often lost when private key information is lost or discarded, passwords can’t be recovered, wallets are forgotten and abandoned, or hardware breaks down. If someone sends Bitcoin to an incorrect public key address, those coins are also lost.

It’s difficult to know exactly how much Bitcoin is lost because some may simply be inactive. Their owners may be holding their coins as they watch prices fluctuate. Or, they may have bought Bitcoin during the early days of the craze and forgot they had it. Whether they are able to access their investments depends entirely on how diligent they were about documenting and securing their wallet information.


The above chart shows Bitcoin wallets that had been inactive for more than one year. It's hard to know for sure, but the spike in April 2014 might be related to the hack of Japan's Mt. Gox exchange two months earlier, and the spike in 2015 may be an after effect of Mt. Gox as well. In August of 2016, the Bitfinex exchange lost 120,000 bitcoins to hackers.

Plain old mistakes play a role as well.
One U.K. man threw away a hard drive containing a wallet of 7,500 Bitcoins, an amount that would have made him a millionaire many times over. Unless his local government allows him to search the landfill for the hard drive (which they haven’t been willing to yet), those coins will stay out of circulation — and out of his grasp — forever.

For his part, Bovard is maintaining an optimistic perspective about his losses, even though his prospects for recovering any of his investments are grim. Not only were his Bitcoin purchased through his then-fiancée, but to make matters worse, they had used Mt. Gox -- the Bitcoin exchange that eventually shut down after hackers stole well over $400 million worth of the cryptocurrency.

As recently as this June, Quartz reported that creditors whose Bitcoin holdings were stolen could receive a windfall pending court cases surrounding the theft. Bovard said he considered seeking legal help to pursue his earnings but decided against it. He couldn’t invest his time and money in a legal case while also coping with the loss of his former partner, and running a business to support himself and their son.

With so little concrete information to go on and virtually no way to prove ownership, he would face an uphill battle, though Bovard says he may eventually try to pursue the lost coins. For now, he’s trying to maintain the same hands-off attitude with which he went into the investment: “Whatever happens, happens. I’m kind of taking the Zen approach,” he said.

Casey Hynes is an Iowa-based writer who covers fintech, AI and blockchain technology. 

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