Most coins probably aren't so lucky and simply end up lost forever if their owners are arrested.

Its usefulness for criminal activities means crypto stashes are increasingly being seized in raids, leaving authorities with the question of what to do with the seized cryptocurrency. In most cases, the obvious answer is to auction them off. These auctions have created some of the biggest names in crypto today. Circle, for example, found itself with huge amounts of money after buying up some of the Silk Road bitcoin being auctioned off by authorities.

But not all countries handle it in the same way, and many are left to improvise sales procedures into existing laws.

In Germany, seized cryptocurrency is sold as quickly as possible as a matter of course, before being lumped in with perishable goods and expensive-to-store objects like cars. Other countries might try waiting and timing the sale for opportune moments.

This has seen the German state of Bavaria complete the largest criminal proceeds sale in German history, the Tagesspiegel reports, selling off $12 million euros of crypto, including 1,312 bitcoin and bitcoin gold, 1,399 Bitcoin Cash and 220 Ether over the course of two months.

A stroke of luck

The timing saw the horde sold after the heights of December and January, but still mostly before the current price slump. Authorities were also fortunate enough to finish the arrests last June, ahead of the airdrops from the Bitcoin Cash and Bitcoin Gold forks, which deposited a few more million into their coffers.

However, the most fortunate part might be that the suspects cooperated and handed over their private keys. Without their cooperation, the money would have remained inaccessible. According to prosecutor Benjamin Krause, the suspects often refuse to hand over their private keys.

This might highlight the potential issue of cryptocurrencies being locked away forever. Of the maximum supply of 21 million bitcoin, a bit over 17 million have been mined and are supposedly in circulation. But it's not known how many of those 17 million are simply gone forever, never to actually circulate. It's almost certainly well into the millions though.

Currently, almost 18% of bitcoin in existence has been untouched and unmoved for at least five years, and the proportion just keeps growing.

Coin entropy

There are plenty of magic tricks to make coins disappear.

One of the most effective is to forget passwords, accidentally throw out private keys or keep keys on now-fried hardware without any backups. And there are the many people who died without any way of letting anyone else get at their coins. Some believe Satoshi Nakamoto is in this crowd, along with about a million bitcoin.

There are also deliberate coin burns and tributes sent to the genesis bitcoin address and coins lost forever after being accidentally sent to incompatible addresses.

Uncooperative criminals might be one of the main sources though, constantly pumping more coins into that permanently untouchable pile. There's no unified system for tracking the amount of crypto being held by authorities, but around the world, it's probably well into the hundreds of thousands, which puts a sizable dent into the total bitcoin supply.

On a long enough time frame, the only way a coin with a finite supply can end is with all of them leaving circulation one way or another. Entropy is a law bitcoin can't fight.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VEN, XLM, BTC and NANO.

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