After prominent Canadian cryptocurrency exchange QuadrigaCX recently declared that its founder, Gerald Cotten, passed away, the company has announced that it no longer has access to millions of dollars worth of user funds — permanently (perhaps) decreasing the total supply of Bitcoin.
Two months after Cotten’s unexpected death in Dec 2018, the company claims that its cryptocurrency cold wallets can only be accessed with a password that was known to him.
In an affidavit filed with the Nova Scotia Supreme Court on Jan 31, 2019, the late founder’s wife admitted that QuadrigaCX owes its users roughly 180 million CAD in cryptocurrency and 70 million CAD in fiat.
Notably, the affidavit also revealed the exact cryptocurrency balances held by QuadrigaCX in its cold wallets. As of Jan 18, 2019, the company was in possession of approximately 26,488 bitcoins, 11,378 Bitcoin Cash coins, 11,149 Bitcoin SV coins, 35,230 Bitcoin Gold coins, 199,888 litecoins, and 429,966 ether.
While the company has, so far, managed to satisfy withdrawal and deposit requests with its accessible hot wallets, it has been struggling with liquidity for the past few weeks. This is because the exchange’s founder would personally move cryptocurrency from the exchange’s cold wallets as a security measure.
If QuadrigaCX fails to recover its wallets, customers that held cryptocurrency balances with the exchange will never be compensated. Furthermore, since there will only ever be 21 million Bitcoin in the world, approximately 0.15 percent of all BTC will be lost forever. This comes in addition to the upwards of 3.79 million bitcoins that are already estimated to be permanently lost.
Founder of cryptocurrency investment firm Morgan Creek Digital, Anthony Pompliano, pointed this out in a tweet earlier this month.
Earlier this week a crypto exchange revealed that they are unable to access ~26,500 Bitcoin that were in their possession.
That means there are 26,500 less BTC available of the 21M total created.
Eventually everyone will understand scarcity.
Don’t be one of the last ones.
— Pomp 🌪 (@APompliano) February 2, 2019
Running out of Bitcoin?
Even though Bitcoin only came into existence a little more than 10 years ago, a significant portion of the total available supply is believed to be lost forever.
At the time of Bitcoin’s inception, it was decided that only 21 million BTC would ever be mined. This finite supply allows the cryptocurrency to mimic the economics of gold — which is only mined in small quantities and is not infinitely available. Notably, a vast majority of the 21 million BTC has already been mined — around 83.44 percent, to be precise.
QuadrigaCX is not the only cryptocurrency entity to have lost a sizeable amount of Bitcoin. Several individuals, companies, and exchanges have lost access to their private keys or wallet passwords over the years — rendering their cryptocurrency wealth permanently inaccessible. This was particularly true in the early days of Bitcoin when its value and demand was minuscule.
Blockchain analysis company Chainalysis previously concluded that close to four million BTC — 20 percent of the total supply — has been permanently lost and is no longer in circulation.
Have you been locked out of your own cryptocurrency wallet? How much more BTC do you think will be permanently lost? Let us know your thoughts in the comments below!
Images courtesy of Shutterstock, Twitter.