Lost Bitcoin Isn’t Lost Productivity

TBM Topics

Share this article

As new Bitcoiners come into the system, things aren’t going to go as expected; that’s the nature of human beings. As there is millions if not billions in gold buried or lost at sea, so too will Bitcoin be lost either through negligence or death. If you think you have strong hands HODL’ing since 2017, imagine the strong hands of those who passed on without passing on their private keys.

It is said that 20% of Bitcoin has already been lost forever. While security, multi-sigs and peoples overall understanding of how Bitcoin works and the improvement of user interfaces, it will surely not be the last of the supply to be lost forever.

The same goes for any cryptocurrency, once those keys go missing, it’s pretty hard to retrieve, and those coins are lost forever. Unforuntaltey as a cryptocurrency matures, that is just the nature of it, which makes looking at circulating supply and total supply a bit harder to measure the actual amount of coins available to be cashed in and out.

You can’t water down Bitcion

As we all know, Bitcoin has a total supply of 21 million fully diluted, but as coins continue to be lost, that fully diluted supply shrinks. I think this aspect of dilution is not yet understood, and the calculations of why a single Bitcoin can be worth $100 000, $500 000 or $1 000 000.

Yes, it may sound like a pipe dream now, especially considering how slow and expensive the network is to use, that it cannot handle those valuations; yes, I give that to you, but with so much value in one network will come solutions to these problems.

Bitcoin has the ability to absorb tonnes of value theoretically, but can it use it optimally? That is the real question we need to ask and eventually solve through a host of scalability solutions such as the lightning network, RGB network, Liquid Network, Wrapped BTC on other chains and more.

There is no one true solution for scalability, and I think we need to accept that and start to work together to find the best way to get the most out of these digital assets.

Lost Bitcoin is a donation to us all

When Bitcoin is lost, it means fewer coins available to be chased by money, making the ones that are left even more valuable; it turns Bitcoin that is still accessible into pristine collateral that the entire cryptocurrency market builds its base on top of, its the entrance and exit for all cryptocurrency, directly or indirectly.

Lost Bitcoin is probably the most altruistic thing someone can do, donating thousands, millions or even billions in future value to the future of the network; if that is not selfless, then I don’t know what the real definition is and how that person cannot live up to it.

Bitcoin can be rehypothecated

As Bitcoin continues to grow and move up towards its Trillion-dollar valuations, people will start to take it seriously. We will see more financial products built on it, settling in it and using server-side transactions instead of on-chain. Yes, Bitcoin can and will be rehypothecated without a doubt; humans love leverage; it’s just the way we are, so it’s unavoidable.

However, unlike fiat, rehypothecation has a limit, and you can call bullshit by pulling your crypto into a wallet where you on the keys. We can have a bank run in crypto to curb bad actors.

It will be interesting to see how Bitcoiners handle rehypothecation and how it will affect the pricing. Like a lot, more Bitcoin will be held by custodians, the more the traditional finance sector and normies look to gain exposure to this asset class.

Disclaimer: This article should not be taken as, and is not intended to provide any investment advice. It is for educational and entertainment purposes only. As of the time posting, the writers may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency, as all investments contain risk. All opinions expressed in these articles are my own and are in no way a reflection of the opinions of The Bitcoin Manual

Related articles

You may also be interested in

side car channels in LN

What Is A Sidecar Channel?

The Lightning Network is a peer-to-peer payment system that requires you to establish a connection with one other network user, in this case, a Lightning

fees on liquid network

How Fees Work On The Liquid Network

The Liquid Network is a layer-2 solution for bitcoin, which allows users to move funds to a different blockchain with a different set of rules

Sign up to our newsletter

Never Miss A Story

Get the latest bitcoin news, articles and resources.

Cookie policy
We use our own and third party cookies to allow us to understand how the site is used and to support our marketing campaigns.