There are millions of people around the world who are accumulating vast fortunes in Bitcoin, the virtual currency that has skyrocketed in value. But a lot of these users may have lost their passwords to their encrypted digital wallets, which are the key to accessing their wealth.
But if you lose your password, your money is gone forever. It’s a nightmare scenario that is playing out among a number of Bitcoin millionaires, who are struggling to access their stashes after losing or forgetting the keys that let them access it.
Stefan Thomas, a German-born programmer who lives in San Francisco, is one of these victims. He says he was given 7,002 Bitcoins as payment for a video that explains how the digital currency works back in 2011.
Now he’s got them all tucked away on a hard drive, but he can’t remember the password to get them out. It’s a problem that could cost him $220 million, as he only has two guesses left to figure out the password on an IronKey device that gives him 10 password attempts before it wipes its contents clean and locks it up for good.
The New York Times reports that out of the existing 18.5 million Bitcoin, around 20%– currently worth $140 billion– are lost or stranded wallets. Businesses helping retrieve digital currencies receive multiple requests each day.
It’s a stark reminder of Bitcoin’s unique technological underpinnings, which set it apart from traditional money and give it some of its most valuable qualities. Its creator, a shadowy figure known as Satoshi Nakamoto, has said that the main idea behind it was to allow anyone in the world to open a digital bank account and hold it in a way that no government can prevent or regulate.
However, it’s also a risk for people who don’t have the time or inclination to remember their passwords. Diogo Monica, the co-founder of a company that helps handle cryptocurrency security, estimates that 20% of all Bitcoins are locked up in hard drives because their owners cannot remember their passwords.
So far, the only way to recover these lost funds is by asking someone who knows how to find a private key and unlock the hard drive, a task that’s proving difficult for even seasoned cryptographers.
But the New York Times suggests that this isn’t the only example of a hard drive containing digital funds being buried in the trash. A British man found a hard drive that contained hundreds of Bitcoins that was tossed in a landfill and offered the city 25% of its worth to excavate it.
Despite the fact that a lot of these cases involve lost or forgotten passwords, there’s another threat to digital wallets as well: hackers. The New York Times says that there are many stories of Bitcoin holders who have been hacked and their wallets stolen, causing them to lose their money.
But the most common problem for crypto enthusiasts who’ve lost their passwords is that they don’t have any idea where to start looking for them. In some cases, they’ve even been caught up in criminal schemes like the Silk Road website.