By Jamie Redman,

Bitcoin is scarcer than people think, as most look at the current distribution at close to 16 million BTC released so far. However, far fewer Bitcoins are actually accessible. Many people don’t account for the thousands missing, some of them burnt, and wallet stashes that may never be spent.

Missing Hard Drives, Faulty Upgrades, and Lost Paper Wallets

There will be only 21 million Bitcoins, and more than two-thirds of those have beendistributed to the public. However most people don’t take into consideration that many of those Bitcoins have either been lost or purposely discarded.

For instance, in November of 2013, the media had reported on a man who had lost 7,500 bitcoins in a landfill. James Howells is one of many who have lost thousands of Bitcoins by accident.

In May of 2016, Bitcoin.com reported on a man who lost US$67,000 worth of Bitcoin while upgrading his computer. The fact is many people have misplaced Bitcoins due to accidents and user error. Mistakes like this have caused significant amounts of the cryptocurrency to be lost forever. Whether it’s computer errors, lost paper wallets or forgotten brain wallets, a non-trivial amount of Bitcoin is gone forever.

The Proof is in the Burn

“Proof-of-Burn” is a somewhat controversial concept, as it discards bitcoins as its own method of consensus. Counterparty made headlines in 2014 for burning over 2,000 BTC to bootstrap its beginnings.

With Proof-of-Burn, bitcoins are sent to an address where they can never be spent again. The idea is that burned assets sent to a verifiably unspendable address is just another variation of Proof-of-Work.

There isn’t a source that has compiled all the burned bitcoins to date at one time a site called BTCBurns had once tracked burn addresses. The number is likely in the thousands, and a few altcoins have burned their own native currencies as well. Whether it’s a cryptocurrency transition or a genesis distribution phase, some find the method of consensus appealing.

Coins on Hold

There’s also a vast amount of coins that are not being spent at present — but could still be in the future. For instance, Satoshi’s stash has been sitting for years, and it is the largest amounts of BTC held by one entity. People assume that these coins will never be spent, but in reality, Satoshi could choose to use them at any time.

There are many addresses within the Bitcoin rich list that have not spent their coins in quite some time. Alongside this many in the Bitcoin space hoard their BTC, speculating the price will rise exponentially in a few years. These coins, although not lost, add to scarcity temporarily and no one knows when they will move.

Additionally, there are hoards of Bitcoin’s maliciously taken in hacks such as Mt Gox andBitfinex. Some have tracked these transactions to the best of their abilities. However, until the attackers decide to spend them these Bitcoins will not see the market.

The person or group responsible must also move this BTC cautiously using stealth, or everyone can see the transactions on the public blockchain. Bitcoin pirated from compromised exchanges are also temporarily unavailable, but could appear again in the future.

Only 21 Million Bitcoin, or Even Scarcer

With only 21 million bitcoins available ever, many believe its scarcity and deflationary aspects are promising. There are some economists who believe this system could lead to a deflationary spiral. The argument is that an economic cycle involving deflation adds to market depressions and a possible currency collapse. The theory first got popular when John Maynard Keynesfamiliarized the academic community with its definitions.

Many other economists, however, believe the “deflationary death spiral” is a myth. Austrian economists believe that fear of deflation is caused by the sophistry of Keynesianism and central banking. With Bitcoin, there is no underlined fixed cost within the equation, but merely speculation. As a result, it means the theory does not apply to the cryptocurrency as its economy grows without any measurement beyond speculative value.

There isn’t a full account of how many Bitcoins are in long-term limbo, or that will never be found. This is acceptable and pleasing to most as it just adds further speculative value on the concept of scarcity.

Since this year’s reward halving, it has become increasingly harder to obtain Bitcoin through the mining process. All these equations add different values to the Bitcoin ecosystem and its overall worth. With only five million left to mine, all that’s left will be current market supply. The truth is, we don’t know how many Bitcoins are out there — only that the cryptocurrency is definitely scarce.