In block 150,951 there are 23 transactions in which there are a total of 2609.363043 Bitcoins lost.
As the blockchain is a public ledger we can freely inspect what coins are unspendable aka lost.
This is exactly what https://bitcoin-supply.com/ does.
Burning coins on purpose is nothing new at all, but has regained popularity in very recent times as people started minting tokens on Bitcoin, but not all burned coins are burned on purpose, some are obviously done via human error.
In the grand scheme of things, it does not really matter, burned coins are burned coins and at the end of the day it makes the leftover coins more valuable.
How Bitcoin Script works - very high level
In this post we will focus on the biggest loss caused by human error, but before this lets explore how Bitcoin Transactions work.
When you give someone an address you are actually giving them a box, which ONLY you have a key that can unlock it.
This is guaranteed by the fact that only the entity that has the private key corresponding to a public key can provide a signature to unlock the box.
These locks are called Bitcoin Scripts.
They are small programs that sit on top of each Bitcoin, when you move Bitcoins you run these programs.
You first run the program, and if it terminates with success, then the Bitcoins moves.
The good part is that you can add very various conditions here.
Multi-sig is an example of such conditions.
But it is up to you to make sure you set the right conditions.
One way to make an error would be to add someone's else address.
Another way is to create some conditions that can never be fulfilled, and yes that is a possibility and it is allowed.
Bitcoin wallets/clients try to limit human error as much as possible, and Bitcoin addresses were designed with this scope in mind.
Bitcoin addresses have a checksum at the end to avoid sending Bitcoin to the wrong address.
This safety check is done at the wallet level. There are no such checks in the script!
The last step in obtaining an address is to hash it with RIPEMD160, this has the effect of shortening the address.
The address is the public key hashed 2 times(SHA256 and then RIPEMD160) and with a checksum at the end.
In the script
It so happens that when you write these programs you can set the condition something like: If the public key that after I hash it with RIPEMD160 does this, then thing can happen.
In case you were wondering what's the deal with RIPEMD160(read with Seinfeld voice), in the picture
OP_HASH160Now of course this Bitcoin Scripting Language it's in incredibly convoluted(quite frankly sucks, but we're stuck with it), and that's not enough, you also have to specify the amount of data you want to use..
That's what
OP_PUSHBYTES_20 does.
This says Hey, take 20 bytes (= 160 bits, the output of the RIPEMP160) when trying to check for the signature.All of this is seen in the "GOOD SCRIPT" section of the photo.
Now the BAD SCRIPT
When we compare the two one thing stands out, there is no
OP_PUSHBYTES_20 and instead there is an OP_0 and this is what makes the coins forever unspentable.
The 2nd script pretty much say: These Bitcoins can be moved by the public key that when hashed with RIPE160 has a 1-byte-output of 0.
But we know that's impossible, as the output of the RIPEMD160 is always 20 bytes, so the condition can never be meet, so coins are locke/lost for evaaaaar.And in case is not clear, all the coins that are lost, all have the exact same bad script.
Who did it?
The Transactions in question were made by Mark Karpeles aka MagicalTux, the CEO of MtGox.
Yes, this was MtGox money, and at the time of the incident, it represented 1 week of income, as Mark said himself.
At the time the 2,609 Bitcoins were worth $10,957, today they are worth $120,200,000.
Hope you liked this little story :D
The TX IDs in 1st pic
In case you want to check the TXs yourself, here they are in a copy-paste format.
| Amount | TX hash |
|---|---|
| 24.31 | 111291fcf8ab84803d42ec59cb4eaceadd661185242a1e8f4b7e49b79ecbe5f3 |
| 100 | 81f591582b436c5b129f347fe7e681afd6811417973c4a4f83b18e92a9d130fd |
| 37 | ddddf9f04b4c1d4e1185cacf5cf302f3d11dee5d74f71721d741fbb507062e9e |
| 98.48055 | 305fbc2ec7f7f2bc5a21d2dfb01a5fc52ab5d064a7278e2ecbab0d2a27b8c392 |
| 39.81 | f0137a6b31947cf7ab367ae23942a263272c41f36252fcd3460ee8b6e94a84c1 |
| 65 | 633acf266c913523ab5ed9fcc4632bae18d2a7efc1744fd43dd669e5f2869ce5 |
| 100 | 5bd88ab32b50e4a691dcfd1fff9396f512e003d7275bb5c1b816ab071beca5ba |
| 21 | 64c01fedd5cf6d306ca18d85e842f068e19488126c411741e089be8f4052df09 |
| 35.784 | 3be0ac3dc1c3b7fa7fbe34f4678037ed733a14e801abe6d3da42bc643a651401 |
| 100 | 9edab6e7fadf1d6006315ff9394c08a7bf42e19cf61502200a1f73994f8da94b |
| 100 | 835d4dcc52e160c23173658de0b747082f1937d1184e8e1838e9394bc62c0392 |
| 143.62 | aebe39a99114f1b46fc5a67289545e54cbfec92d08fc8ffc92dc9df4a15ea05a |
| 367.7584932 | aa62bdd690de061a6fbbd88420f7a7aa574ba86da4fe82edc27e2263f8743988 |
| 100 | 6a86e6a5e8d5f9e9492114dafe5056c5618222f5042408ad867d3c1888855a31 |
| 35.78 | 7ad47a19b201ce052f98161de1b1457bacaca2e698f542e196d4c7f8f45899ab |
| 100 | 0ca7f7299dc8d87c26c82badf9a303049098af050698c694fbec35c4b08fc3df |
| 100 | 3ab5f53978850413a273920bfc86f4278d9c418272accddade736990d60bdd53 |
| 497 | 03acfae47d1e0b7674f1193237099d1553d3d8a93ecc85c18c4bec37544fe386 |
| 100 | 15ad0894ab42a46eb04108fb8bd66786566a74356d2103f077710733e0516c3a |
| 200 | 2d00ef4895f20904d7d4c0bada17a8e9d47d6c049cd2e5002f8914bfa7f1d27b |
| 98 | 6d39eeb2ae7f9d42b0569cf1009de4c9f031450873bf2ec84ce795837482e7a6 |
| 100 | 07d33c8c74e945c50e45d3eaf4add7553534154503a478cf6d48e1c617b3f9f3 |
| 45.82 | 6d5088c138e2fbf4ea7a8c2cb1b57a76c4b0a5fab5f4c188696aad807a5ba6d8 |