The amount of Bitcoin (BTC) which has not been transferred in more than five years has reached a new all-time high. This statistic is coupled with overall stability in the price of Bitcoin when compared to the majority of altcoins, leading to a number of suggestions for the cause.
A million bitcoins remain in the possession of its elusive creator, Satoshi Nakamoto. New statistics, however, show that as of July 19, there is a total of 3,847,859 BTC that has remained untouched for more than five years. A number of conjectures about what these statistics actually mean for the Bitcoin network as a whole have been offered.
Bitcoin Transitioning to a Store of Value
Many industry insiders have long argued that Bitcoin is a store of value (SoV) asset similar to gold. With mathematical scarcity, the coin represents a potential hedge against economic chaos. The increasing amount of nonmoving coins could validate this argument as a shift in this direction.
"The amount of Bitcoin (BTC) supply that has been untouched (i.e. not transferred) for at least five years recently reached an all-time high. This potentially signals that BTC is increasingly becoming a store of value, as opposed to a medium of exchange."https://t.co/GGrqOZHmnT pic.twitter.com/TwJG18lFp7
— Matt Odell (@matt_odell) July 23, 2019
Satoshi initially described and offered Bitcoin as a currency, or medium of exchange (MoE). However, the decentralization of the network protects the asset from fluctuations due to political or economic unrest. A shift toward SoV from MoE indicates a bullish future.
Human Error at Play
However, in response to the Store of Value argument, crypto Twitter regular Tuur Demeester pointed out that five years is a long time to hibernate and that there is a very good chance that the majority of these stagnant coins have simply been lost.
I'm not so sure… 5 years without updating your cold storage method is a long time in Bitcoin. Imo most of these coins are likely lost. pic.twitter.com/lJmEOiPvY3
— Tuur Demeester (@TuurDemeester) July 23, 2019
Demeester’s analysis would suggest that human error has caused the stasis of most of the untouched coins. Interestingly, he points out that the lack of updating one’s cold storage in more than five years only furthers cements the hypothesis that the coins are lost.
Losses Are Gains
Such losses have far less of an effect on the Bitcoin platform since they do not represent a change in thinking for the community at large. At the same time, losses nearing four million bitcoins only increases the scarcity, cutting the total theoretical supply from 21 million to about 17 million.
Such a supply decrease should increase the price per BTC since the demand is determined by market forces. Evaluating exactly how many coins are actually lost, however, would be a nearly impossible task.
Whether the coins are being stored for their value or have been lost may never be known. Nevertheless, increasing numbers of untouched BTC does limit liquid supply in the marketplace, and in turn, overall scarcity.
Do you think the increasing number of untouched bitcoins comes from loss or from HODLers? Will these factors have any significant impact on the price in the long term? Let us know your thoughts in the comments below!
Images courtesy of Shutterstock, Twitter.