Saw this on the news this morning: a programmer has about $240 MILLION worth of Bitcoin locked on a secure drive, and he lost his password. He wrote it down on a piece of paper and lost the paper years ago.
Thomas has already tried eight possible passwords, and he only has two left before the password will “encrypt itself, making the wallet impossible to access.”
Let this be a lesson on proper password security to all of us-- it the password is really really important, you don’t just write it down on a sticky note, you write it down on TWO sticky notes so you have a backup.
One would assume the data is not directly encrypted using the password, rather it is encrypted using a randomly chosen key that is unlocked by the encryption hardware and is erased after too many wrong passwords. So you could only get the key via serious hardware hacking.
Roughly speaking, bitcoins rely on secret/public key pairs, so if you just lose your secret keys then the bitcoins are still “there”, but you have no way to access them for any transactions so I suppose it’s a distinction without a difference.
I can’t say off the top of my head what determines the bitcoin “market value” but I assume if you do have access to enough of them you could manipulate the price somewhat by buying and selling; you can destroy them Joker-style by transferring them to an address for which no one has a secret key but the one thing you can’t do is create more of them at will.
One of Penn Jillette’s co-hosts of his podcast told of his buddy who, years ago, transferred a very small amount of Bitcoin to his then girlfriend. He estimates its worth today at something like $32 million (or some similarly crazy amount). He has no idea if his now ex is aware of its value or knows the password.
Another co-host talked of how, back in the days of Bitcoin’s infancy (it was work a couple bucks then), he had always meant to allow tipping in Bitcoin at his small-time performances. He never did get around to doing that. Yeah, he regrets that a bit.
I have to admit I did something very similar to that guy in regard to Bitcoin carelessness: at my previous job I worked with a programmer who was a great guy, but a bit of a paranoid anti-government type who used to rant about things like how our ‘fiat currency’ was due for imminent collapse. He was big into Bitcoin.
About 5 years ago, to evangelize and get the word out about Bitcoin, he gave everybody in our dept. these little sticky-note size certificates that represented a fraction of a Bitcoin- worth about 48 cents at the time. I kept it in my wallet until it accidentally went through the wash and the Bitcoin cert was ruined.
I just looked up what the value would be today— about $36, give or take. Not quite the same as losing $240 million but still, bummer. The guy who gave the cert to me must be set up nicely- he used to mine Bitcoin back then.
I remember intending to mess around with Bitcoin way back. Probably around 2011, when it seems slashdot first had a story about it. I got distracted, and never bothered, or maybe I couldn’t get the client to work and got bored. The frustrating part is that I’m real good about data retention and password management. If I’d mined up a bunch of bitcoin way back then, I could locate the password in seconds.
Oh well, no point in worrying about it, as it’s just as frustrating as having in 2018 bought a Tesla, not TSLA.
There is also this story, summarized: Journalist loses bitcoin on a secure device. He can’t remember the password, and holds on to the device. Later, a security flaw in the secure device is found, and he can break in and get his bitcoin.
I just heard a Planet Money podcast about lost Bitcoin. I can’t remember the exact number, but I believe they said that about 20 percent of all Bitcoin is in locked wallets that owners have forgotten about, lost their passwords, or died. That 20 percent is worth well over 100 billion dollars.
In a related story, someone threw away an old disk drive, then belated remembered that it contains bitcoins currently worth about 273 million dollars. He has offered to donate 25% of the value if the local garbage dump will allow him to excavate it to find the drive.
At some point, I expect to read on Reddit a post from someone who knows a Bitcoin password but refuses to tell the owner who’s forgotten it because they (the owner) are a terrible person.
