They are lost for good.  Think of it like someone losing their wallet in the ocean.  It seems like it would be a problem but it's really not that significant.  People lose their gold jewelry all the time but it doesn't make much of a difference to the value of gold.

I wonder though, is there a point where the difficulty of generating a new coinbase is so high that it would make more sense to try to recover keys for lost coins or steal other people's coins instead?  The difficulty of that is really high so for now it makes a lot more sense to generate but I just wonder what the real figures are.. would that ever become more productive?  Maybe Satoshi can address this..

But remember that each bitcoins can be divided into 100 million pieces, as needed.

And the more valuable they become, the more careful people will be not to lose them.

The current user interface doesn't support smaller than 0.01 increments but it is possible to support it in a future revision.

Last but not least one can make tons of backups. Once could also setup a bank, even insurance could be made. You could also put your a wallet onto a media (cdrom, tape, whatever) and put it into a safe, like you would to it with money or gold. Then you can have a small wallet.

In most regards bitcoin is just like any other currency. If you are stupid enough to not keep it save it's your fault. It's like walking on the beach with all your money. Simply don't do it!

Maybe I could create a bank, but I'd have to think about away to make myself trustworthy.

If you put your money onto a bank account you also have to trust them. If they mess up their system and nobody knows who was the owner of the money it's exactly the same. Inside the bank your money only exists in a virtual way. Most of the time (not always, because they invest your money) it is backed up by something physical, but if you loose the data to link the physical with the virtual stuff the system is completely messed up.

To make it short: BitCoin is just money, so don't think of it as something too abstract. You can secure it, like every other money.

In most situations it's easier. It isn't that easy to encrypt your money before you put it in your safe, is it? 

Wouldn't it be good to modify the protocol, so any coins that weren't moved for 1000 days (for example) could be returned back into the system and mined again? We would get rid of some issues this way (lost coins, wasted space). Anyone who hoards bitcoins should just transfer the coins from wallet to wallet once a year.

So if I'm going to jail for 10 years, my coins will be stolen from me? Bad idea.

Two other threads on the topic from within the last month:

https://bt.irlbtc.com/view/104422.0
https://bt.irlbtc.com/view/109117.0

I don't get where this argument comes from. I've seen it many times. Making this argument requires a fatal flaw in logical thinking. Let me explain this in a simple way:

People lose bitcoins -> value of remaining bitcoins go up -> average bitcoin user has less bitcoins -> people lose less bitcoins on average -> price still goes up -> average bitcoin user has again less bitcoins -> people lose less bitcoins on average.

So in the long term this will only cause the price of bitcoins to go up a bit and for people to lose less bitcoins after that. Even in a million years we wouldn't reach 0 bitcoins and as you all should know, bitcoins can be divided to smaller pieces quite effectively.

This argument is broken even without taking into account how educated people are in using Bitcoin. That is entirely irrelevant for countering this argument. Taking care of your bitcoins is a smart thing to do though, so I'm all for it.

This thread is better. It was started quite earlier.

Yes, if you're not looking for updated information...

Because the idea of not being able to steal other people's money fills them with great anxiety.