When the key is the property itself

The Chainalysis estimates of lost bitcoin (2017 and 2020)

My professional insights · Lyudmil Karaulanov · 5 min read

Published: 1 October 2026 · Version 1.0

The context

Chainalysis is an American company that analyses the movement of crypto-assets on the blockchain, the public ledger of all transactions. In November 2017 it published the first empirical estimate of how much bitcoin has been irretrievably lost. In June 2020 a broader analysis followed, of how the bitcoin in existence is distributed between long-term holders, traders and lost coins.

The central thesis

The first study put lost bitcoin at between 2.78 and 3.79 million, or between 17% and 23% of the amount then in existence. The method divides the available coins by age and activity and estimates the losses through statistical sampling. The 2020 analysis counts around 18.6 million bitcoin mined. Around 60% is with holders who have never sold more than a quarter of what they received. Around 20%, or approximately 3.7 million bitcoin, has not moved for five years or more, and the company classes it as lost, because the owners no longer have the keys for access.

The conclusion is that a significant part of this asset is in practice out of circulation, and no one can use it.

What is often overlooked

The popular account presents the figure as an established fact: a fifth of all bitcoin is lost. In reality the estimate rests on an assumption. A coin is counted as lost because it has not been moved for a long time, not because it has been proved that the key has been destroyed. The lost coins also include close to a million bitcoin attributed to the anonymous creator of the system, of whom no one knows whether he is alive or whether he still has his keys. The estimates of other analysts vary considerably.

There is a deeper lesson here too. This very assumption, that long inactivity means loss, is the mistake we warn against in automatic mechanisms for inherited access: inactivity does not prove death.

A reading for the owner

With a bank account, a forgotten password means delay. The heir can turn to the bank, prove his right and in the end receive the funds. With crypto-assets held by the owner himself, there is no institution before which anything can be proved. The key is not a means of access to the property. In practice it is the property. No certificate of heirs can replace it.

That is why divided safekeeping here is a matter not of caution but of the survival of the asset. The key must not be written down in one place accessible to anyone, but neither must it be known only to the owner. The solution is a scheme designed in advance, in which no single person holds everything, but certain people, on certain conditions, can restore access. We develop the theme in the analysis “Passing on wealth”.

The limit of applicability

The problem mainly concerns crypto-assets that the owner keeps himself. Assets with a regulated provider behave more like a bank account: the heirs can prove their right before it. In the EU these providers are now subject to licensing and supervision. But this form, too, carries a risk of its own. When the founder of the Canadian crypto exchange QuadrigaCX died in 2018, it turned out that he alone had controlled access to the clients’ funds, and the investigation also found abuses. The concentration of keys in one person is a problem whether that person is the owner or the custodian.

The point of instability

What this concept means →

The point of instability arrives when the only evidence of ownership is knowledge that exists solely in the memory or the device of one person. Then the heirs’ right is beyond dispute, and the property is out of reach. Writing the key down in a file open to all is precisely the opposite mistake. The resilient solution lies between the two.

This material is of a general analytical nature and does not constitute individual legal, tax, financial or investment advice.