Bitcoin creator Satoshi Nakamoto has famously said that lost coins “only make everyone else’s coins worth slightly more” and that they should be thought of as a “donation to everyone.” The Blockchain Intelligence Group’s Fasanello said that when it comes to coins with a limited supply, Satoshi may be right, but those with an infinite supply could see the reverse be true.
Fasanello said that just as fiat currency loses value with inflation, so do cryptocurrencies. If a cryptocurrency doesn’t have a finite supply, the value of the lost coins is simply going to erode over time.
Speaking to Cointelegraph, Yuriy Kovalev, CEO of crypto trading platform Zenfuse, said that lost coins represent a hidden cost of security in the cryptocurrency space that benefits everyone else: “The amount of lost crypto only shows that decentralized networks like Bitcoin are extremely secure, so much so that trivial mistakes can cost millions. Wallet hunters are seldom only able to help in cases of lost passwords, further proving the blockchain is immutable.”
Indeed, most cases in which lost tokens are recovered involve lost passwords used to unlock wallets and not the private keys used to recover them. A recent case saw a computer engineer and hardware hacker crack a Trezor One hardware wallet that was locked because its owner had forgotten its security PIN.
Asaf Naim, founder and CEO of blockchain application developer Kirobo, told Cointelegraph that Satoshi’s words may be true for “minor and occasional instances of losing crypto,” but Naim added that the “law of scarcity only holds if people have confidence in the underlying system. If too much cryptocurrency is lost, people will stop believing in its use and its intrinsic value.”