A forgotten password could cost this man $240 million in Bitcoin!

by Vrinda Jain
A forgotten password could cost this man $240 million in Bitcoin!

January 14, 2021

Hundreds of people are sympathizing with the man who has "locked" his fortune. Now, with only two chances left for luck to work, people sit on the edge, waiting for him to be a millionaire.

In this digital world, we have become used to keeping passwords, either for different accounts or for files and folders. With the deep involvement of the e-world in our biologically natural lives, it has become challenging to keep everything in our minds. And a similar tragedy has befallen on Stefan Thomas.

Thomas has done more than almost anyone to popularize the cryptocurrency and blockchain space producing educational materials that introduced millions to the technology.

The Curious Case of Stefan Thomas

Stefan Thomas, a computer programmer, based in San Francisco, has only two chances to keep his hands on his fortune of $240 million (£175 million). He earned 7,002 bitcoins a decade ago as an incentive for making a video that demonstrated the working of cryptocurrency. At that time, the cryptocurrency was worth $2-$6 each.

A session of AMA (Ask Me Anything) on Reddit, held by the CTO of Coil, a platform that monetizes the contents of users, Stefan Thomas, also known for being the CTO of Ripple.

Bitcoins and Cryptocurrency- Monopolistically Synonymous

Stefan kept his money in his “digital wallet,” stashed them away and forgot about them. And now, every Bitcoin is worth $34,000, making the contents of his wallet worth a total of $240 million. Thomas, however, tragically forgot the password that would unlock his wealth.

The millennial programmer has already entered the wrong password eight times. His hard drive, which contains his private keys to the bitcoin, will be encrypted if he guesses the incorrect password two more times hand he’ll never get hands on his money.

Last week, the bitcoin price reached more than $40,000, having doubled in less than a month. It had earlier fallen, but since the pandemic was first announced in March last year, it is still up by more than 700%, rising from around $5,000.

I lay in bed and think about it, then I would go to the computer with some new strategy, and it wouldn't work. I would be desperate again.

- Stefan Thomas

Thomas has attempted to access his IronKey hard drive with his eight most commonly used passwords, but all turned out to be incorrect. After the 10th wrong guess, the computer auto-encrypts all information.

How Do Bitcoins Work?

A form of money that is solely virtual — this is the simplest definition of a Bitcoin, which is also commonly referred to as cryptocurrency. Virtual currency or cryptocurrency is literally like a variant of cash online. You can use it to purchase goods and services. However, not many stores still allow Bitcoin and some countries have even prohibited it due to the lack of a digital infrastructure that can ensure such currency’s security.

Every Bitcoin is essentially a data file stored on a smartphone or computer in a ‘digital wallet’ app. People can transfer Bitcoins to each other’s digital wallets. In a public list called the blockchain, every single transaction is registered. This allows the Bitcoins to be tracked to avoid individuals from investing coins that they do not own, making copies or undoing transactions.

Computer Processed Transactions

There are devices that are are designed to carry out extremely difficult quantities. And these transactions are sometimes compensated with a Bitcoin for the owner to keep. Just to try and get Bitcoins, people set up powerful computers which is illegal and is called mining.

Each transaction is publicly registered, so copying Bitcoins, making fake ones, or spending some that you don’t own is quite tricky. You can lose or delete your Bitcoins from your Bitcoin wallet and lose them forever.

Why are passwords significant for Bitcoins

Bitcoin provides an effective means of exchanging money over the internet and is regulated by a decentralised network with a straightforward set of laws, thus providing an alternative to central bank-controlled paper money. One may transfer bitcoin to a non-custodial wallet, which is often called a cold wallet or cold storage. These wallets are hardware devices or even bits of QR-coded paper. They’re not connected to the internet, even when you’re actively engaging in a transaction so they can’t be hacked into.

Since bitcoins are held in a digital wallet, they require a password for the same. This password in technical terms is called a private key. As long as one remembers the password, the public key can be recovered even if the paper or hardware storage is lost or damaged. But if one loses the password for cryptocurrency deposited in cold storage then the money is simply lost. It continues to live on the blockchain without any owner at all. No government or corporation can take control over it.

Losses due to Bitcoins

The peculiar characteristics of cryptocurrency have also locked out many individuals from their Bitcoin fortunes due to missing or forgotten keys. As the price has risen and dropped sharply, they have been forced to wait, powerless, unable to cash in on their digital resources.

According to the cryptocurrency data firm Chainalysis, about 20 per cent of the existing 18.5 million Bitcoins, collectively worth about $140 billion, tend to be in missing or otherwise stranded wallets. A company that helps locate missing digital keys, Wallet Recovery Services, said it had received 70 requests a day from people who wanted help to recover their wealth.

As they tried to get access to their fortunes, Bitcoin owners who are locked out of their wallets talk of endless days and nights of frustration. Since Bitcoin’s early days a decade ago, many had owned the coins, when no one had faith that the tokens would be worth something. But as it turns out, the coins have multiplied in their worth, but the owners are having a hard time cashing them in.

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