The Bitcoin Bull Case Nobody’s Talking About: The 21 Million Offer

• Bitcoin’s price may rise over time as more tokens “burn” after being lost.
• Bitcoin that is lost, either when an investor dies or is simply locked in their wallet, reduces the available supply.
• According to experts, estate planning is critical for Bitcoin investors who store the coin in a cold wallet.

A growing trade deficit, a $35 trillion debt stock and the consistent loss of purchasing power in the US dollar have long been considered key pillars of the bullish Bitcoin thesis.

Even Donald Trump’s potential election victory in November has been attributed to the cryptocurrency’s recent bullish performance.

The world’s largest cryptocurrency is just a few percentage points away from a new all-time high.

However, there is a structural bull case that is not talked about much, although it could have a significant impact on the long-term price of Bitcoin: tokens are lost in the event of death or simply poor planning.

This argument has recently arisen in light of the recent furor surrounding the potential exposure of pseudonymous Bitcoin creator Satoshi Nakamoto in an HBO documentary released this month. Before the premiere, some speculated that it was American programmer Len Sassaman, who died in 2011.

The death of Satoshi Nakamoto could potentially calm the big fear that has hung over the Bitcoin market for years, namely that the man might sell off his supposed 1 million Bitcoins.

That’s a significant percentage of the 21 million Bitcoins that will ever exist, and such a massive selloff has long been feared as a bearish event for the token.

If Satoshi did not leave proper instructions for transferring assets upon his death, then the fixed supply of 21 million Bitcoins would likely be closer to 20 million.

Sean Farrell, head of digital asset strategy at Fundstrat, highlighted this dynamic in a note earlier this month.

“There is a small upside risk if they identify someone who is deceased, as that would effectively burn up Satoshi’s holdings forever,” Farrell said.

“The true number of bitcoins is undoubtedly lower than 21 million,” Farrell told Business Insider. “We all know this is true, but it is almost impossible to verify.”

This is also because it is relatively easy to lose bitcoins, even if you are still alive.

Lost Bitcoin essentially “burns” it, reducing the amount available to investors to buy and reinforcing a basic economic principle: less supply means higher prices with constant or increasing demand.

Farrell estimates that about 1.5 million bitcoins, or about 7.5% of the total, can be considered “probably lost” because they have not moved since the first bitcoin exchange launched in 2010, about a year after bitcoin was created.

A 2021 article from The New Yorker tells the story of a Welsh man who lost a stash of bitcoins, then worth about $500 million, when he accidentally dumped the hard drive containing his bitcoin stash.

“It will probably only be over time that we will be able to understand how much of the bitcoin was lost,” Farrell said.

Savvy investors who own large amounts of Bitcoin often store the cryptocurrency in encrypted cold wallets to protect against hacking.

In these cases, this means that the bitcoins are not stored on an exchange like Coinbase, which has a recovery process for family members of deceased customers.

Rather, it is usually stored on a physical USB drive, which can appear meaningless to the unassuming eye and can easily get lost or skimmed while cleaning out the estate.

The decentralized nature of Bitcoin means that no bank or authority can access or recover the assets without the private key to the wallet or hard drive.

“Unlike traditional financial accounts, there is no institution you can contact to recover your cryptocurrency. If no one has your private key, the funds will be locked forever,” Wealthica CEO Eric Lemieux told Business Insider.

He added: “If you store your Bitcoin in a cold wallet and die without giving anyone access to your private recovery keys or recovery phrases, the Bitcoin could be lost forever.”

Lemieux said it’s critical for Bitcoin investors who hold assets in a cold wallet to make sure their estate planning “includes your private key or recovery phrase through a lawyer or an encrypted document stored securely.”

Otherwise, losing Bitcoin could mean even higher prices for the cryptocurrency.