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'Lost Coins' Study Estimates BTC's True Supply

Many people like the fact that Satoshi Nakamoto introduced a capped supply of 21 million coins when he created the Bitcoin protocol. However, there’s been a lot of speculation aimed at guessing the number of ‘lost coins’ that will never be spent. On November 19, the digital currency data and research site Coin Metrics published an in-depth study that estimates the true number of BTC’s circulating supply.

Also read: Walk Like Nakamoto: 7 Anonymous Personalities in the Crypto Space

Coin Metrics Estimates the Number of Lost Bitcoins

According to various data websites, there’s 18,056,300 BTC in circulation at the time of publication. This number, however, only accounts for the amount of BTC mined into existence and does not account for lost coins. People who love the fact that BTC is scarce are extremely fascinated by the subject of lost coins because in the early days many bitcoins were either lost, burned, stolen, or even forgotten. Even Satoshi explained that lost bitcoins “make everyone else’s coins worth slightly more” and said to “think of it as a donation to everyone.” This week, researchers at Coin Metrics published an analysis of how the public can use different methods to assess BTC’s true supply.

“In this feature, we dive into why Bitcoin’s supply is lower than expected and calculate how many coins are permanently lost,” Coin Metrics’ post states. “Furthermore, we analyze exactly why these coins are lost, and account for what happened to them. We first examine coins that are provably lost, and then analyze coins that are assumed to be lost, but could potentially eventually be found.”

'Lost Coins' Study Estimates BTC's True Supply
James Howells from Wales told reporters in 2013 he lost 7,500 BTC ($60,533,700) when he tossed a hard drive in the trash. Howells attempted to recover those coins by sifting through the landfill but to no avail.

The study discusses provably lost coins like unspent outputs such as the 50 BTC locked in the first block. “The result is that those 50 BTC are not present in Bitcoin’s ledger, even if they are visible in a transaction included in the main chain,” the researchers stress. Further, the research highlights duplicate coinbase transactions, unclaimed rewards, and OP_Return outputs that use more than a value of zero satoshis. “In total, we can compute Bitcoin’s actual supply at block 600,000 working backwards from the expected 18M BTC value and subtracting what is provably lost,” the study details. “This figure of 17,999,817 BTC as of block 600,000 is the ‘technically correct’ view of Bitcoin’s supply.”

'Lost Coins' Study Estimates BTC's True Supply

Assumed Losses and Stolen Coins

Following the subject of provably lost coins, the paper discusses assumed lost coins like bogus addresses, bugs in script, and ‘zombie coins’ or UTXOs “that haven’t moved in many years.” Lastly, the study looks at stolen coins or large numbers of coins that are “difficult to insert back into circulation.” A good example of this is when 79,956 BTC was taken from Mt. Gox exchange and the funds now rest in the sixth richest BTC address. From the number of lost coins analyzed, the Coin Metrics researchers developed three adjusted views of the BTC protocol’s supply. One view that counts provably lost coins, another perspective that accounts for assumed lost coins, and another that excludes provably, stolen, and assumed lost bitcoins.

Coin Metrics research says there are a variety of other methods that can be used to measure BTC’s true supply. “Another way to estimate Bitcoin’s supply would be to break it down by time of last activity with the expectation that coins untouched for years are probably lost,” the report concludes.

'Lost Coins' Study Estimates BTC's True Supply

The researchers at Coin Metrics further state that the analysts will continue to monitor the lost bitcoins phenomenon going forward. If you’d like to read Coin Metrics’ “State of the Network: Issue 26” report in its entirety, you can find it here.

What do you think about the number of lost coins in comparison to the number of bitcoins mined into existence? Let us know what you think about this subject in the comments section below.


Image Credits: Coin Metrics, Shutterstock, BBC, Fair Use, and Twitter.


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Jamie Redman

Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written thousands of articles for news.Bitcoin.com about the disruptive protocols emerging today.

Jamie Redman , 2019-11-19 20:30:39 ,

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NewsBlock © 2019 - 2020. All rights reserved.


While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

Featured Image from Shutterstock


Nick Chong , 2019-11-10 12:00:38

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