One of the driving factors behind BTC, and why it appeals to many, are its deflationary qualities. Current FIAT currencies are inflationary in nature, because current governing bodies have the ability to simply print more money whenever they see fit. Bitcoin on the other hand has a fixed supply. With recent generations turning to precious metals as a store of value, due to their inflation resistant nature, the creators of the BTC protocol decided to model it after precious metals. Except they decided to make it deflationary, taking a driving benefit behind precious metals and making it even better. With the supply fixed at 21 million BTC, the price of per coin will continue to rise with increased adoption, as the relative scarcity of each coin will become greater.
There has been an unforeseen set of events that have made BTC even scarcer than most people realize. Over the 10 short years since Bitcoin came to fruition, there have been countless coins lost – unable to ever be retrieved. There have been many horror stories about people mining mass quantities of the coin back in college, and proceeding to throw away their drives. They did so because at the time, they gave up on BTC and thought that it had turned out to be a useless experiment. They were absolutely wrong.
Wired magazine purposefully threw away over 10,000 BTC in 2013. This is now worth over $100,000. At the time they were given a BTC miner for review from a company. Throughout the course of their review, they were able to mine 13 BTC. Due to the need to remain impartial and practice proper journalism, the proceeds of this device needed to be destroyed. They agree upon this and proceeded to destroy the private keys needed to access to mined BTC.
In a more painful chain of events, individual miner James Howells threw away a jump drive by accident containing 7500 BTC, now worth $60,000,000. That’s right – $60 million USD. ($150 million at Bitcoins peak in December 2017). A very early adopter of BTC, James mistakenly threw away his empty drive containing his BTC that was amassed during his time as a miner. There goes another 7500 BTC forever lost from the 21 million hard cap.
These heartbreaking stories have even caught the attention of popular media, with the topic becoming the focus of an episode of the hit show ‘The Big Bang Theory’. In the episode, the gang scrambles to retrieve forgotten BTC on an old laptop, only to find that through a chain of events, a friend found a jump drive with their Bitcoin on it. Not knowing it contained to BTC, he proceeded to wipe the drive and sell it for $10.
Events such as these have been speculated to account for roughly 18% of the total supply of BTC. This equates to almost 4million BTC lost with a unique story for each. So an already scarce coin has become even rarer. We will never know the true number of coins lost, so the price of BTC will always be undervalued to an extent.