Losing bitcoins

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What could be the consequences of many bitcoins being lost out of circulation if people lose their wallets?

So I am trying to comprehend this Bitcoins system so please bare with me if I get it wrong.

If I care at all about my bitcoin wallet I should back it up, otherwise, if I have coins in my wallet and then lose my wallet.dat then my coins are gone forever.

I also heard somewhere that after a while coins will no longer be able to be mined. If this is the case, and tons of people lose their wallet.dat (for whatever reason. eg. Virus, format, new PC, etc), would that cause coins to get more and more hard to find, which in turn would make coins be worth more, but would "mining start again"?

Sorry if this sounds stupid I'm still new at this.

Jonah Sabean

Posted 2012-11-05T00:51:39.703

Reputation: 11

Welcome to bitcoin.stackexchange.com! It is a good question you ask, and you're correct about the importance of not losing your wallet. I think you'll find the link I provided addresses the key part of your question. – Highly Irregular – 2012-11-05T01:19:12.883

Answers

A wallet holds the private keys necessary to spend bitcoins. If you are running the Bitcoin.org client and lose access to your wallet.dat then a backup copy of the wallet is the only way you can be able to spend the funds.

If you have no backup or can't access the backup then the funds are gone.

People that prefer not to have the responsibility for keeping a backup of their wallet might like to use an EWallet, such as Coinbase and Paytunia, which are hosted (shared) EWallets, or Blockchain.info/wallet which is a hybrid wallet.

As far as mining to recover coins, there is no recovery ever for the funds from the lost wallet. They are gone forever.

Stephen Gornick

Posted 2012-11-05T00:51:39.703

Reputation: 26 118

I also heard somewhere that after a while coins will no longer be able to be mined.

There is an upper limit of 21 million coins, after that no more coins will be mined but that will not be for many years yet. Also see this answer on mining after all 21 million bitcoins have been mined for what will happen then.

If this is the case, and tons of people lose their wallet.dat (for whatever reason. eg. Virus, format, new PC, etc), would that cause coins to get more and more hard to find, which in turn would make coins be worth more, but would "mining start again"?

If people lose their wallets and the number of bitcoins in circulation is reduced this does not directly impact how "hard" it is to "find" (mine) coins, instead this is determined by the difficulty which is a parameter set by the network to try to maintain a block generation time of 10 minutes on average and is adjusted every 2016 blocks. Lost wallets may indeed cause bitcoins to be worth more as the supply is reduced and this could cause the hash rate to increase and thus increase the difficulty in that way. Bitcoins from lost wallet.dat files cannot be re-mined but are gone for good unless the wallet file can be recovered somehow.

kirian

Posted 2012-11-05T00:51:39.703

Reputation: 3 179