Ethereum, the second-largest cryptocurrency by market capitalization, has seen over 913,000 ETH permanently lost due to human and technical errors. Unlike traditional finance, where banks can reverse mistaken transactions, the decentralized nature of Ethereum means that once a transaction is confirmed on the blockchain, it is irreversible.
According to Conor Grogan, Director at Coinbase, the lost Ethereum amounts to approximately $3.4 billion at current prices, representing around 0.76% of Ethereum’s total circulating supply. The main reasons for Ethereum being lost include wrong address transfers, smart contract vulnerabilities, and multisig wallet failures.
Wrong address transfers occur when users mistakenly send ETH to incorrect or non-recoverable addresses, such as typos or incompatible blockchain networks. Smart contract vulnerabilities can lead to funds being locked, redirected, or exploited, with no way to recover them. Multisig wallet failures happen when a multi-signature wallet is misconfigured or the required keys are lost, making the ETH stored permanently inaccessible.
Notable incidents of Ethereum loss include the Parity Wallet Bug, where 306,000 ETH was lost due to a contract being destroyed by a bug. QuadrigaCX lost 60,000 ETH due to poorly managed wallets after the CEO’s death. Akutars NFT lost $34 million in ETH due to two smart contract bugs, and approximately 25,000 ETH was sent to unrecoverable addresses due to typos.
Unfortunately, lost Ethereum cannot be recovered due to the immutable nature of the blockchain. Once ETH is sent to an invalid or inaccessible address, it cannot be retrieved, as there is no central authority to reverse or recover the funds. Grogan believes that the actual number of lost Ethereum may be higher than $3.4 billion, as many incidents go unreported or unnoticed.
In conclusion, the loss of over 913,000 ETH highlights the importance of being vigilant when transacting with cryptocurrencies. Users must double-check addresses, ensure the security of smart contracts, and properly manage their wallets to prevent the permanent loss of valuable assets.