Around 3.7 million bitcoin, currently worth around $140 billion, appears to be permanently lost or stranded in disused digital wallets, US-based paper The New York Times reported Tuesday.
Due to the digital and decentralized nature of bitcoin, owners must hold private keys of data, often a set of words, in order to access their wallet. Losing this complex password can result in losing all access to the digital wallet.
The New York Times reported Tuesday that US-based blockchain analysis firm Chainalysis estimates around 20 percent of the 18.5 million bitcoin in existence is already lost. Although these coins technically remain in the world’s supply and hold value, they are inaccessible and thus out of circulation.
This is in contrast to traditional money, in which banks can often provide their customers with passwords to reset their accounts should they lose access – highlighting an intrinsic risk with cryptocurrency.
The Times added that Wallet Recovery Services, a company specializing in helping people find lost digital keys, is receiving 70 requests a day from people looking for help to access their digital riches – a number that has risen threefold from a month ago.
The spike in interest in recovering access to lost bitcoins is likely connected to the currency’s startling rise in value. Experts have noted that compared to 2017, when the currency soared to new heights before severely crashing, this time is different.
Traditional banks and asset managers have begun to move more investments into bitcoin, arguing the currency has begun competing with gold as an asset class.
“Bitcoin’s competition with gold has already started in our mind … Considering how big the financial investment into gold is, a crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term,” JP Morgan strategists told Reuters last week.
JP Morgan went on to highlight the possibility of the currency reaching valuations of between $50,000 to $100,000, although warned these levels would be unsustainable until volatility levels out.
“We note that the spectacular bitcoin rally of the past few weeks has moved bitcoin into more challenging territory, not only in terms of its positioning backdrop, but also in terms of its valuation,” the bank added.