Why are Bitcoins considered "lost"?
Bitcoins are considered lost when they become permanently inaccessible to their owner, and therefore cannot be used by anyone else. The main reasons include:
Loss of private keys or passwords: If someone forgets the password to their wallet or loses the private key, those Bitcoins are locked away forever.
Failure or damage of storage devices: Old hard drives that are discarded, USB drives that malfunction, or computers that stop working, if they contained the wallets and no backup of the keys was made, the Bitcoins are lost.
Sending to incorrect or non-existent addresses: Bitcoin transactions are irreversible. If a user sends Bitcoins to an address that does not exist or to an incorrect address by mistake, those funds are lost forever.
Death of the owner: If the holder of the Bitcoins passes away without leaving anyone the necessary information (private keys or passwords) to access their funds, those Bitcoins become inaccessible.
Key Estimates:
Some sources, such as Chainalysis and River Financial, estimate that between 1.5 and 2 million BTC have been lost due to forgotten keys.
Other studies, including reports from Unchained Capital, have estimated that up to 3.8 million Bitcoins have been permanently lost.
These estimates also include approximately 1 million Bitcoins mined by Satoshi Nakamoto himself, which have shown no movement since the early days of the network and are assumed to never be moved.
Implications of Lost Bitcoins:
Although it is a loss for their original owners, the loss of Bitcoins contributes to the scarcity of the asset. Since the maximum supply of Bitcoin is limited to 21 million units, each lost Bitcoin reduces the amount of Bitcoins in circulation, which, in theory, increases scarcity and potentially the value of the remaining Bitcoins.