Bitcoin’s (BTC-USD) spectacular rise over the past year has been fueled in part by the idea that there’s a limited supply of the cryptocurrency. The maximum number of coins, derived through mining, is 21 million, with more than 18 million currently in circulation. But a significant number of them may be lost, never to be accessed, leaving their original holders unable to cash in on untold millions in profits.
“Our estimate is 3 million were lost,” Michael Novogratz, founder and CEO of crypto asset manager Galaxy Digital, told Yahoo Finance Live. Access to bitcoin requires a digital key that only the holder possesses. If the key is lost, the bitcoin wallet can’t be accessed.
“When bitcoin was one cent or four cents or 20 cents, people didn’t take it that seriously,” said Novogratz. “Most of the lost bitcoins aren’t happening today...They happened right at the early onset of this thing.”
The New York Times recently told the stories of several individuals who lost their passkeys, including the chief technology officer of crypto company Ripple. The price has soared — despite a pullback to around $36,000 from a high of nearly $42,000 in the past week, it has still more than quadrupled in the past year.
That means fewer people are making that mistake.
“No one’s losing bitcoin anymore,” Novogratz said.
That means supply is even more constrained. Bitcoin, recall, was conceived as a decentralized currency, outlined in a white paper by someone called Satoshi Nakamoto.
As Novogratz pointed out, bitcoin has also traveled some ways from its original conception in another key way as well: few people use it for transactions.
“One reason I never thought bitcoin would be a currency: fixed supply currencies don’t work. They’re too easily squeezed, they go up in price by definition as more and more people enter the ecosystem. We don’t want to buy shoes one day with something that’s worth $1 and worth $2 the next day.”
Rather Novogratz said, bitcoin is a store of value. He says coins-as-currency will be left to the likes of Facebook’s Diem coin, formerly called Libra.
Julie Hyman is the co-anchor of Yahoo Finance Live, weekdays 9am-11am ET.
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