When wallets are lost, coins are effectively removed from circulation. Lost coins still remain in the block chain just like any other coin, however these lost coins remain dormant forever because there is no way for anyone to find the private keys that would allow them to be spent. We may implement multisig, or Hierarchical Deterministic wallets, which will allow for users to recover lost coins as long as they still possess one of the private keys, or the seed data in the case of HD wallets. When fewer coins are available, the value of the remaining coins increases in order to compensate due to a higher demand with a lower supply. This follows the law of supply and demand.