Let’s take note of the variables and constants in this scenario.
- Amount of Bitcoins in the network (supply) is constant since the cap is placed at 21 Million Bitcoins.
- Demand is a variable.
- Death of the person having been foretold is a constant.
Let’s reconsider the situation.
A person owning a set number of Bitcoin dies without revealing his private key to anyone. No one would be able to access the funds in his wallet, hence all the Bitcoins present in the deceased person’s wallet cannot be used by anyone else.
The value of the Bitcoin would certainly be a lot more than it was whenever the person died since the demand is the only variable in this situation and as the demand increases, the value shall definitely increase.
From a Security Standpoint:
The wallet can be accessed with a private key and a public key together which can be obtained through brute force but this process of obtaining the key would take years altogether.
Rest assured, if a person dies without revealing his private key to anyone, it’d take one longer than the person’s lifetime to actually get the private key of the deceased person through brute force.
If ‘A’ intends to spend the Bitcoin from ‘B’ ’s wallet, he needs B’s private key to sign the transaction without which he wouldn’t be able to spend any Bitcoin from B’s wallet.
Brute force is the only possible method by which one can actually spend the Bitcoins in the wallet by obtaining the private key and it is an extremely long process to be carried out in reality.
Wallets are encrypted with AES 256 CBC encryption which haven’t been cracked to this date.
If one assumes that:
- Every person on the planet owns 10 computers.
- There are 7 billion people on the planet.
- Each of these computers can test 1 billion key combinations per second.
- On average, you can crack the key after testing 50% of the possibilities.
Then the earth’s population can crack one encryption key in 77,000,000,000,000,000,000,000,000 years!
To answer your question, yes all the bitcoin are completely unusable without the private key. The value of the Bitcoin ecosystem, however, remains the same since all the other Bitcoin in the network would relatively increase in value at the same time.
One might even consider looking into a scenario of a burnt Bitcoin where Bitcoins are rendered unusable to add value to another Cryptocurrency.