How Much Bitcoin and Crypto Assets Goes Missing After Users Pass Away?
A few days ago the QuadrigaCX exchange announced that they lost around $190 million in virtual currencies due to the fact that the owner of the exchange passed away. According to different reports that spread on the internet, the owner of the platform, Gerald Cotten, was the only person in possession of the digital assets of the platform.
The exchange lost 26,488 Bitcoin (BTC), 1,000,000,000 XRP, 200,000 Litecoin (LTC) and 429,000 Ether (ETH). These are large sums of digital assets. The XRP lost represent more than 1% of the total supply of this digital asset.
However, this is not the first time that there is a situation in which an individual that passes away is the only person knowing about his private keys. In some cases, they forget to share them with family or close people in case something would happen to them. And indeed, it is even possible to see that there are several wallets from Bitcoin’s first days that have not moved their funds since then. Thus, the private keys of these wallets are presumably lost forever.
Passing away is not the only situation that reduces the supply of virtual currency. Lots of investors have lost their private keys, thus, they are not able to recover the funds they’ve stored in their wallets.
Another individual that passed away is Matthew Mellon, having around $500 million worth of XRP in his cryptocurrency wallet. As nobody close to him has these private keys, these XRP are lost forever. At that time, these $500 million worth of XRP were equal to 833.33 million XRP. Between Mellon and Cotten, the XRP supply is almost reduced by 2 billion (~2% of its total issuance).
These are just two deaths that affected the crypto market, there are several other deaths that did not reach the newspapers and that have also affected the supply of different digital assets.
For example, Bitcoin has millions of BTC that have been lost forever. According to some estimations, there is 3.7 million Bitcoin lost in wallets around the world after the owners forgot their private keys or just lost them.
As virtual currencies do not work as traditional financial institutions, it is not possible for relatives to request the funds that these individuals lost after their death. The private keys are very important for users because without them it is impossible to have access to virtual currencies.
The Bitcoin supply is over 20% smaller than what it currently is if we take into account the estimations made by several reports regarding the number of BTC lost. This shows that the scarcity of this digital asset is larger than what we believe it is. In the future, a reduced supply will have a positive effect on its price if the demand for this specific asset increases.
According to CoinMarketCap, there are 17.52 million BTC. Around 3.7 million BTC have already been lost forever. That means that Bitcoin’s real supply is currently 13.82 million BTC.
It is always important for individuals to share information about private keys with close relatives in case something happens to the owner of the digital assets. In addition to letting them know about the private keys, it is always something positive to include a small guide on how cryptocurrencies work and how to be able to control them.