I’d argue that since January 2009 about 50% of the ~17M coins minted to-date are lost. But the realization that this number will asymptotically approach 100% of all coins is a bit striking.
The reasoning is simple - maintaining control of your coins is surprisingly difficult. The harder you try to secure them from theft, the more likely an accident will wipe them away. The more redundancy you keep to protect from losing them, the more they are exposed to theft. And as time goes on, the random noise of life conspires to blot your coins out of existence. And once they’re lost, there is simply no recovery.
The supply of Bitcoin is not asymptotically approaching 21M. The supply is approaching zero.
So the more it gets artificially valuable, the more useless it becomes for its intended purpose.
Oil is pegged to the dollar. The price of oil is relevant because of its effects on prices, not the dollar.
Oil producers may target a dollar price and trade in dollars, but oil is not pegged (that is: trading with a fixed exchange rate) to the dollar.
Unlike gold, you can also add redundancy and cryptographic protection, but even without that you can at least be as secure as you are with gold, which plenty of rich people store in vaults without issues.
Idiots destroy wealth in all sorts of stupid ways.
So hackable, you're saying?
The discussion is turning in circles. People lose coins. Have a backup. Too difficult. Put them in a bank. Banks are hackable. Manage the coins yourself. But then I might lose them.
(you can replace bank with 'trusted third-party', doesn't change the outcome)
Consider the two options: self-managed, or in a trusted third-party. Whichever has the smaller (perceived) risk, that's where you store your coins. Not everybody asses risk equally, and that's fine. My preferred solution may not be the same as your preferred solution. That's fine, still.
I mean, the wallet software is obviously open source, and you can change it however you want of course, but allowing for transactions to be undone would basically require rewriting the entire protocol and everything which interacts with the bitcoin network - and that's if it's even possible in the first place, without removing vital parts of bitcoin like the decentralization or being able to trust the entire network without trusting any one entity.
- Software you use for key generation uses a known random-seed.
- Compromised software that converts your seed into an address/priv key.
- Compromised transaction generation software.
- Offline wallet physically stolen
- Malware / firmware exploit on USB used to transfer transactions between online & offline computers
Bitcoin over corrects by not allowing any new coins to come into existence. Imagine the day there is only a single bitcoin left. Regardless of how small you can split it, massive deflation.
Currencies with a fixed or decreasing supply are a disaster.
Even in the Bitcoin community it's a huge misconception that Bitcoin is somehow inherently deflationary. The supply increases predictably through mining. It can be price deflationary when demand exceeds supply. But there is nothing inherent or guaranteed about that at all.
Bitcoin is inflationary, with a predictable inflation schedule.
We don't know the extent of lost coins. We can make an estimate based on inactive accounts. And stolen coins that have been blacklisted are essentially lost too.
> Bitcoin is inflationary
Crypto people are deluding themselves.
I think you're technically right, as the "miner reward" (as in the coins the miner cand give itself as a reward for finding a block) goes to 0, and you probably know that already, but I wanted to clarify for people who didn't yet know that.
Otherwise, I agree.
And I don't think we are talking about some theoretical astronomical time span here - after a few hundred years (assuming in a few hundred years someone still cares about the bitcoin ledger), the proportion of lost coins must be huge - just think about people passing away without providing a way for their heirs to find the keys, maybe because they die young or because they have no heirs etc.
So yeah, not very good at maintaining data secure for the average person ;)
It's easy for most people to keep their personal data safe, because they're not targeted by attackers because there's little of value. It's hard for people whose sensitive data is valuable to keep it secure; if valuable white house secrets were stored with my strategies for protecting my personal sensitive data, they'd have been leaked ages ago.
Once your sensitive data is highly valuable, like if you store a decent amount of cryptocurrencies (or is an attractive female with private nude pictures or have a big YouTube channel), protecting sensitive data from the likely targeted attacks is hard.
: https://en.wikipedia.org/wiki/ICloud_leaks_of_celebrity_phot... (I'm not sure if there was monetary value in those pictures, but they certainly had other forms of value.)
: https://www.youtube.com/watch?v=LlcAHkjbARs (He talks a lot about unrelated (to this discussion) about his Amazon links; go to 3 minutes in for the discussion about being compromised.)
Interesting anecdote, but not really super informative.
Obviously, the next step is we can reformulate your statement to say that the total number of Bitcoin lost or stolen will eclipse the total supply, given enough time. However, since the total supply is fixed, and time is not, that's not a very profound revelation.
Yes, that's a pretty harsh accusation to make, but there is plenty of evidence that this happens with some regularity and the number of instances is high enough to make that claim. And it will continue as long as gullible people place 100's of millions in unsecured accounts without oversight.
Who knew that regulatory oversight was a good thing?
"Imagine that a friend is building a casino and asks you to invest. In exchange, you get chips that can be used at the casino’s tables once it’s finished. Now imagine that the value of the chips isn’t fixed, and will instead fluctuate depending on the popularity of the casino, the number of other gamblers and the regulatory environment for casinos. Oh, and instead of a friend, imagine it’s a stranger on the internet who might be using a fake name, who might not actually know how to build a casino, and whom you probably can’t sue for fraud if he steals your money and uses it to buy a Porsche instead. That’s an I.C.O."
I don't think it's mutually exclusive though. Tux was an awful coder and Mt. Gox was a scam at the same time.
It's illegal to steal, regulated or not.
Seems they've a password issue where the password is always wrong even if you wrote it down at the time of setup.
The suggested solution on the GitHub issues is to use a brute force attack using a python script. Such an issue just screams poor testing.
That is atrociously bad. It appears to use a pure-python implemention of AES (!!!) . Holy cow. This is going to be miserably slow. Using all the CPUs isn't going to help when it's going to be literally tens of thousands of times slower than better techniques.
You will literally have time to learn hashcat  from scratch, learn how to implement the plugin, test the plugin with some sample passwords, and run it yourself, and still save time over running the Python script, because even if you leave the Python script running during the entire, say, week you spend learning all this, the hashcat script will still outrun Python in the first minute or so, by my somewhat conservative estimate that it will run 10,000x faster. (I wouldn't consider 100,000x out of reach. Depends on your GPU. But hashcat will still be faster even just on the CPU alone.)
(Also hashcat shows some ethereum support, but neither of the two things it says say "aes". I don't know whether hashcat would support this out of the box, I'm just saying that you literally have time to implement this from scratch and still be faster than running that Python script.)
(I also want to be clear that this isn't GPU fanboying. It can't be, because I'm not one. GPU computing is very often oversold. But this is legitimately one of those cases where GPUs can smoke CPUs by multiple factors of magnitude.)
If a coin is lost, it is out of circulation, and the net effect is that it is distributed to all the remaining holders of that cryptocurrency.
Meaning the value of the remaining coins increases a tiny bit because supply was reduced?
I used to remember how every hack hits the market really bad
This time every hack is like business as usual https://www.coingecko.com/en
Which is why when I get into investing in crypto. I take coin hack risk and volatility risk into account from day
* Yes, I know market cap is a poor metric, but it’s equivalently bad to the $500M “lost” metric used here.
EX: Satoshi's coins could all have been lost at this point.
It's equivalent to the losers transferring all their coin to the rest of the network participants (in proportion to their stake).
But the examples in the article are about coins being stolen, not lost or destroyed. Someone somewhere still has it and is presumably able to spend it.
quite a lot of these stolen coins were tracked down and weeks later locked by exchanges when someone tried to sell them.