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Also Hal Finney and others who helped in the beginning may have left sums of BTC behind (RIP). A personal anecdote, somewhat related: In the early days, I mined

Also Hal Finney and others who helped in the beginning may have left sums of BTC behind (RIP). A personal anecdote, somewhat related: In the early days, I mined several blocks from the wallet itself, on an AMD Sempron or Duron, at about 800-900mhz. Even then, this took a few days and then weeks before eventually becoming impossible with the advent of mining pools and GPU mining arrays. Speaking for myself only, some of us just lost or discarded them because they had no value, and mining them was more of an act of altruism, so while it was fun seeing the numbers go up, it was easy to lose track of a wallet. I don't think electrum seed phrases were around yet at that time, either, or I had no knowledge of them if they were.

zaroth 9y ago
I think people massively underestimate the number of Bitcoin which are forever lost. I’d put it at well over 50%, and the true market cap is much less than we think it is because of this. IMO “Satoshi” coins are part of this unrecoverable set, but of course I have no data to base that on, just a hunch.
- drtillberg 9y ago
  A coin that vanishes unpredictably would be the worst sort of money. Ironically, under Gresham's Law, such a currency would dominate other forms of money because everyone would be in such a hurry to exchange it for goods before it disappeared.
  - sillysaurus3 9y ago
    BTC can be divided into satoshis, which are extremely small units. If someone loses 1 BTC, the value of all the rest simply goes up.
    - billmalarky 9y ago
      For those wondering, a satoshi is 1/100,000,000 of a bitcoin. At the current bitcoin price of $14591, a satoshi is worth $0.0001459190. The maximimum amount of minable bitcoins is 21 million. Current global gold supply is ~ $7 trillion If bitcoin completely replaces gold, bitcoins will be trading for about $333,333.33, so a satoshi would be worth ~$0.0033.
      - sillysaurus3 9y ago
        And if BTC reaches $33M, which is not impossible, that implies $0.33 is the smallest unit of currency. People use quarters for mostly everything now, so this is again quite reasonable.
        CamelCaseName 9y ago
        Reasonable how? That's a $530T+ valuation at the current number of tokens, or about two times as much as the total global wealth according to Credit Suisse. [0] [0] https://www.credit-suisse.com/corporate/en/research/research-institute/global-wealth-report.html https://www.credit-suisse.com/corporate/en/research/research...
        sillysaurus3 9y ago
        I meant satoshis are a reasonable "smallest unit" even at absurd valuations. But that's not necessarily impossible to attain. If BTC wins and the world switches, the resulting bubble might be that big.
    - deleted 9y ago
      [deleted]
  - jameskegel 9y ago
    Don't go there, I got rid of them through my own actions. This isn't some serendipitous disappearance, this is not a takeaway from my anecdote, and certainly not something that should be used to detract from the value of BTC.
  - caf 9y ago
    This isn't coins that have turned to dust when you take them out of your wallet to spend - this is coins that have been lost overboard from a cruise ship in the middle of the ocean.
  - totalZero 9y ago
    Gresham's Law technically applies to nonidentical versions of the same legal tender. That's not applicable to Bitcoin, because there is no material difference in the manufacture of individual Bitcoins, and nobody is forced to use or accept it. But to think this through, maybe there would be three components to the dynamics of such a theory. 1) Bitcoin will continue to vanish as holders die, forget about their bitcoin, or lose access to their wallets. 2) Up until a certain point, this will cause the value of Bitcoin to increase, as reduction of the Bitcoin supply is deflationary. Those who recognize that this deflation is occurring will hang on to their Bitcoin, because of the expectation that their holdings will appreciate in value. 3) After a certain point, people will realize that much of the total Bitcoin capitalization has been lost/forgotten, and they will be in a hurry to use Bitcoin (sell it for goods) before their holdings become too large in proportion to the total non-lost capitalization still in circulation. Proportionally large holdings are worthless if they cannot be liquidated or used. (Similarly, imagine a currency with two holders, half each; neither is incentivized to accept large transactions because if one sells out, the other is left owning the entire currency by himself.) I predict that people will realize that Bitcoin is incapable of robustly facilitating a global amount of transactions without centralization in banks/hubs/wallets/exchanges, thus defeating its stated advantage of immediacy and anonymity, far faster than individual coins fall out of use.
    - drtillberg 9y ago
      I think anyone panicked right now over the loss of their BTC because of a lost key, broken HDD, forgotten pwd, or the BTC just it isn't there anymore for reasons unknown-- those people will never feel secure holding BTC again in any form. The psychology of loss is powerful, and grown-ups just don't put their life savings in insecure stores of value. The value of BTC is part scarcity and part network effect. In a rational world (what we usually get in the long term) disappearing BTC would have an impact on the network effect. Interestingly, Gresham's Law suggests it would be a positive effect. A likelihood that wealth will be destroyed at death-- I would think that would deter adoption.
      - nske 9y ago
        Funny that you mention that because people in many countries panic daily over the loss of their life savings in banks or government-backed hard currency. They have seen them vanish to a scale that can't even compare due to corruption, politics, incompetence, or reasons unknown. The psychology of loss is powerful indeed

zaroth 9y ago

I think people massively underestimate the number of Bitcoin which are forever lost. I’d put it at well over 50%, and the true market cap is much less than we think it is because of this. IMO “Satoshi” coins are part of this unrecoverable set, but of course I have no data to base that on, just a hunch.

drtillberg 9y ago
A coin that vanishes unpredictably would be the worst sort of money. Ironically, under Gresham's Law, such a currency would dominate other forms of money because everyone would be in such a hurry to exchange it for goods before it disappeared.
- sillysaurus3 9y ago
  BTC can be divided into satoshis, which are extremely small units. If someone loses 1 BTC, the value of all the rest simply goes up.
  - billmalarky 9y ago
    For those wondering, a satoshi is 1/100,000,000 of a bitcoin. At the current bitcoin price of $14591, a satoshi is worth $0.0001459190. The maximimum amount of minable bitcoins is 21 million. Current global gold supply is ~ $7 trillion If bitcoin completely replaces gold, bitcoins will be trading for about $333,333.33, so a satoshi would be worth ~$0.0033.
    - sillysaurus3 9y ago
      And if BTC reaches $33M, which is not impossible, that implies $0.33 is the smallest unit of currency. People use quarters for mostly everything now, so this is again quite reasonable.
      - CamelCaseName 9y ago
        Reasonable how? That's a $530T+ valuation at the current number of tokens, or about two times as much as the total global wealth according to Credit Suisse. [0] [0] https://www.credit-suisse.com/corporate/en/research/research-institute/global-wealth-report.html https://www.credit-suisse.com/corporate/en/research/research...
        sillysaurus3 9y ago
        I meant satoshis are a reasonable "smallest unit" even at absurd valuations. But that's not necessarily impossible to attain. If BTC wins and the world switches, the resulting bubble might be that big.
  - deleted 9y ago
    [deleted]
- jameskegel 9y ago
  Don't go there, I got rid of them through my own actions. This isn't some serendipitous disappearance, this is not a takeaway from my anecdote, and certainly not something that should be used to detract from the value of BTC.
- caf 9y ago
  This isn't coins that have turned to dust when you take them out of your wallet to spend - this is coins that have been lost overboard from a cruise ship in the middle of the ocean.
- totalZero 9y ago
  Gresham's Law technically applies to nonidentical versions of the same legal tender. That's not applicable to Bitcoin, because there is no material difference in the manufacture of individual Bitcoins, and nobody is forced to use or accept it. But to think this through, maybe there would be three components to the dynamics of such a theory. 1) Bitcoin will continue to vanish as holders die, forget about their bitcoin, or lose access to their wallets. 2) Up until a certain point, this will cause the value of Bitcoin to increase, as reduction of the Bitcoin supply is deflationary. Those who recognize that this deflation is occurring will hang on to their Bitcoin, because of the expectation that their holdings will appreciate in value. 3) After a certain point, people will realize that much of the total Bitcoin capitalization has been lost/forgotten, and they will be in a hurry to use Bitcoin (sell it for goods) before their holdings become too large in proportion to the total non-lost capitalization still in circulation. Proportionally large holdings are worthless if they cannot be liquidated or used. (Similarly, imagine a currency with two holders, half each; neither is incentivized to accept large transactions because if one sells out, the other is left owning the entire currency by himself.) I predict that people will realize that Bitcoin is incapable of robustly facilitating a global amount of transactions without centralization in banks/hubs/wallets/exchanges, thus defeating its stated advantage of immediacy and anonymity, far faster than individual coins fall out of use.
  - drtillberg 9y ago
    I think anyone panicked right now over the loss of their BTC because of a lost key, broken HDD, forgotten pwd, or the BTC just it isn't there anymore for reasons unknown-- those people will never feel secure holding BTC again in any form. The psychology of loss is powerful, and grown-ups just don't put their life savings in insecure stores of value. The value of BTC is part scarcity and part network effect. In a rational world (what we usually get in the long term) disappearing BTC would have an impact on the network effect. Interestingly, Gresham's Law suggests it would be a positive effect. A likelihood that wealth will be destroyed at death-- I would think that would deter adoption.
    - nske 9y ago
      Funny that you mention that because people in many countries panic daily over the loss of their life savings in banks or government-backed hard currency. They have seen them vanish to a scale that can't even compare due to corruption, politics, incompetence, or reasons unknown. The psychology of loss is powerful indeed