Lost Passwords Lock Millionaires Out of Their Bitcoin Fortunes

[ZiprHead]

Bitcoin owners are getting rich because the cryptocurrency has soared. But what happens when you can’t tap that wealth because you forgot the password to your digital wallet?

Stefan Thomas, a German-born programmer living in San Francisco, has two guesses left to figure out a password that is worth, as of this week, about $220 million.

The password will let him unlock a small hard drive, known as an IronKey, which contains the private keys to a digital wallet that holds 7,002 Bitcoin. While the price of Bitcoin dropped sharply on Monday, it is still up more than 50 percent from just a month ago, when it passed its previous all-time high of around $20,000.

The problem is that Mr. Thomas years ago lost the paper where he wrote down the password for his IronKey, which gives users 10 guesses before it seizes up and encrypts its contents forever. He has since tried eight of his most commonly used password formulations — to no avail.

Of the existing 18.5 million Bitcoin, around 20 percent — currently worth around $140 billion — appear to be in lost or otherwise stranded wallets, according to the cryptocurrency data firm Chainalysis. Wallet Recovery Services, a business that helps find lost digital keys, said it had gotten 70 requests a day from people who wanted help recovering their riches, three times the number of a month ago.

Bitcoin owners who are locked out of their wallets speak of endless days and nights of frustration as they have tried to get access to their fortunes. Many have owned the coins since Bitcoin’s early days a decade ago, when no one had confidence that the tokens would be worth anything.

“Through the years I would say I have spent hundreds of hours trying to get back into these wallets,” said Brad Yasar, an entrepreneur in Los Angeles who has a few desktop computers that contain thousands of Bitcoin he created, or mined, during the early days of the technology. While those Bitcoin are now worth hundreds of millions of dollars, he lost his passwords many years ago and has put the hard drives containing them in vacuum-sealed bags, out of sight.

“I don’t want to be reminded every day that what I have now is a fraction of what I could have that I lost,” he said.

Sympathy or humor?

 

[laughing dog]

Wow. Humanity never ceases to surprise and amuse me.

I have no sympathy for bitcoiners.

 

[Jarhyn]

Wow. Humanity never ceases to surprise and amuse me.

I have no sympathy for bitcoiners.

So, I'll point out first that I have no sympathy for people who use bitcoins, specifically, because bitcoin isnlt fungible like other digital currencies. I use digital currency because I want privacy in what I do with it, and bitcoin doesn't even approach making that possible.

That said, digital currency has a place and function in society insofar as they allow a digital exchange medium that isn't stealable, controlable, or trackable. It's currency you don't need a bank to send, and that only gets taxed when it gets cashed in and out. You can send any quantity of it to whoever for whatever reason. You don't need other people's permission to spend it!

The problem I see is that Bitcoin is going to collapse in favor of something more useful with more privacy. My money is on Monero at this point, because all the drug markets, the real core use case of decentralized digital currencies, are switching to Monero slowly but surely. As the non-speculative economic activity that gives speculation weight is abandoning Bitcoin, I expect the whole facade of the thing to come crashing down.