A German-born programmer in San Francisco has now used up eight of 10 password attempts he has to unlock the hard drive containing the private keys to his Bitcoin wallet, which contains 7,002 Bitcoin (BTC). As of press time, those holdings would be worth $268 million — that is, if only they were accessible.
As a New York Times profile on Jan. 12 outlined, Stefan Thomas uses a hard drive called an IronKey, but lost the paper on which he wrote down the password for the device “years ago.” If Thomas fails to remember it, 10 failed guesses will result in the drive encrypting its contents forever. He has, so far, tried eight guesses with no luck.
“I would just lay in bed and think about it. Then I would go to the computer with some new strategy, and it wouldn’t work, and I would be desperate again.”
Nearly 20% of all existing Bitcoin — 18.5 million BTC — is thought to have been lost for good, in so-called “stranded” wallets, according to Chainalysis data. Thomas is not alone in his self-avowed desperation: a Los Angeles entrepreneur, Brad Yasar, told the Times that over the years “I would say I have spent hundreds of hours” trying to get back into inaccessible wallets.
Yasar has stored away his hard drives “in vacuum-sealed bags” so that he is no longer “reminded every day that what I have now is a fraction of what I could have that I lost.”
Neither story is uncommon: Wallet Recovery Services, a company that specializes in recovering lost digital keys, reportedly gets 70 requests each day from clients seeking help. That number is three times higher than it was before the bull market.
Thomas’s experience has apparently turned him off the concept of a technology that places the onus on individual users to take their finances into their own hands — with all the freedom, and risks, that it entails. Having originally received the 7,002 BTC as a gift in exchange for producing a video to educate people about the currency, he’s now skeptical about leaving users with that degree of control:
“This whole idea of being your own bank — let me put it this way: Do you make your own shoes? The reason we have banks is that we don’t want to deal with all those things that banks do.”
Aside from his extraordinary losses, Thomas nonetheless held on to enough Bitcoin over the years to make a fortune — he is reportedly so wealthy that he barely knows what to do with it, to paraphrase the report. He also later joined Ripple and acquired XRP, although the company’s recent legal difficulties may now cast a shadow over the project’s future prospects.
The report notes that similar risks exist when users entrust third-party custodians with their keys — citing Mt. Gox and other industry crimes — but does include input from those who believe the trade-offs of digital currency are, at the end of the day, worth it.
An entrepreneur in Barbados, despite having lost 800 BTC in the past, claimed that “the risk of being my own bank comes with the reward of being able to freely access my money and be a citizen of the world.” His view, from a corner of the globe where financial inclusion remains a concern, provides an insight into why many individuals may continue to think likewise.