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I bought some bitcoins in 2012 and forgot about it. Now years later I discovered that the company who maintained the wallet went bankrupt and their website no longer works.

I therefore have lost access to my bitcoins forever.

I assume my story is not the single case where this happened.

As there is a limited amount of bitcoins, what will happen as more and more people lose access to their wallets with time?

What would be the effect on the market?

  • I don't see this question as being subjective or opinion based; there is science that deals with this kind of effect. – Highly Irregular Nov 6 '17 at 22:38
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    Here’s an interesting post answering a similar question: bitcoin.stackexchange.com/a/57674/56382 – Dr.Plastics Nov 7 '17 at 1:58
  • "the company who maintained the wallet went bankrupt and their website no longer works"- It's possible they scammed you by secretly saving the private keys of your wallet and the other users for themselves – Santropedro Dec 31 '18 at 1:06
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The price of bitcoin is affected by demand and scarcity.

Scarcity decreases as more bitcoin are mined (up until the 21 million bitcoin limit is reached---this is the maximum number that can ever be mined), which decreases the price. Scarcity increases as coins are lost (e.g. through the destruction of a wallet), or just held indefinitely (e.g. the ~1 million bitcoins of Satoshi Nakamoto that 'may' never get spent). Therefore, with demand staying above the number of coins available the price will continue to increase (as people are willing to pay more to be the one able to buy the coins, beating out the others also wanting to buy them).

Now obviously if we look far ahead (assuming bitcoin survives long enough), there is the foreseeable problem that ultimately the number of bitcoins in circulation will decrease to the point that eventually one satoshi (0.00000001 BTC), the minimum value one can currently hold, will be worth more than a desired minimum, e.g. one could be worth $2000, limiting bitcoin's use to only larger transactions. Thankfully the number of decimal places in bitcoin isn't a hard limit, so this could be increased in the future such that it wouldn't matter if there were even only one bitcoin in the world.

  • I mean the 21 million limit has always been there. The more bitcoins mined will hardly affect the price. It really is just the amount people are willing to pay for it. For example a bitcoin fork that's in the near feature will increase the price to the 7.6k it reached 2 days ago or something cause of the segwit2x. After the fork, I can almost guarantee the price will go down and slowly go up again. – Loko Nov 7 '17 at 14:43
  • @Loko Think of it like gold. Gold isn't being created, it's only being mined. It's no different to bitcoin in this regard. The amount available as it relates to demand is what's important, not how much exists that isn't presently accessible. The reason for the bitcoin price trending upwards is because demand has been increasing at a greater rate than availability. Price will likely drop after segwit2x as the uncertainty decreases demand. – Toby Hawkins Nov 7 '17 at 14:59
  • @TobyHawkins I agree with the price dropping soon but what do you think of the linear rise of bitcoin? The amount of bitcoins mined in that period have gone up but the price has not gone down. I agree with you logically the scarcity should impact it but it doesnt(at least not much) because the hype is insane. I can also guarantee that after the drop as a result of segwit2x, the price will continue to go linearly up. – Loko Nov 7 '17 at 15:20
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    @Loko Scarcity affects it but right now, as you've alluded to, demand is increasing at a far greater rate than supply so price continues to rise quickly. Many people are still unaware of bitcoin (and the majority of people who are don't really understand it), so as awareness continues to increase I imagine this will be a trend that'll continue for the foreseeable future (but who knows, right?). When looking at the longer term, the hype will die down eventually and we will see far more of a balance between these two factors. Right now we mainly see scarcity as a factor when market dumps happen. – Toby Hawkins Nov 8 '17 at 16:39
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Most websites offering online wallets store your bitcoins against their own private key (giving them control over them), and provide you with tools to spend the bitcoins. While you don't have the private key, this means you don't really have bitcoins any more; instead, you have bitcoin-credits through the specific business you're dealing with.

When such a business goes bankrupt, it's entirely likely the bitcoins were not just abandoned; they most likely would have been used to pay debt the business owed. ie Your bitcoins may well belong to someone else now.

However, in the case where nobody has access to a private key any more, the bitcoins are essentially lost forever. In the long run this would, on average, be expected to raise the market price in proportion to the amount lost.

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The effect would be to make the remaining bitcoins worth more over time as the others remain unspent, as I understand it.

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