Losing a Bitcoin password can cost hundreds of millions
San Francisco programmer has two more chances to guess password to Bitcoin worth $220 million
Bitcoin can make you extremely rich. But it's worthless for owners who have lost their passwords.
A computer programmer living in San Francisco has only two more chances to guess his password. If he fails, he won’t be able to access Bitcoin that, as of this week, is worth about $220 million, according to the New York Times.
His problem isn’t that unusual. People forget passwords all of the time. But there is typically a procedure provided by a bank or online store to allow you to get back into your account.
FILE- In this Dec. 21, 2017, file photo, a Bitcoin logo is shown is displayed on an ATM in Hong Kong. (AP Photo/Kin Cheung, File)
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That’s not the case here. The problem is the programmer, Stefan Thomas, lost the password for his IronKey hard drive, which contains the keys to a digital wallet with 7,002 Bitcoin, the Times said.
It “gives users 10 guesses before it seizes up and encrypts its contents forever,” according to the report. So far, he has tried eight times and failed.
About 20% of the existing 18.5 million Bitcoin are inaccessible because they’re either in “lost or stranded wallets,” according to the Times, which cites cryptocurrency data firm Chainalysis.
To get an idea of how much that is worth, as of Wednesday afternoon, the value of one Bitcoin is more than $34,000 – and that’s even after a sharp price drop on Monday. As a result roughly $140 billion in bitcoin has been lost or stranded.
The cryptocurrency hit $34,773.60 per coin on Wednesday, down from more than $40,000 earlier in the week.
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"Unfortunately, losing private cryptocurrency keys is a very common issue,” Darren Guccione, CEO and co-founder of cybersecurity and password management provider Keeper Security, told FOX Business.
“Losing private keys is just like losing physical cash," Guccione added. "If, for example, you lose a $50 bill, that money is lost forever. A private cryptocurrency key is unique to the owner because it identifies them as well as the amount of cryptocurrency registered to that owner. If you lose this private key, you lose your cryptocurrency – it's that simple.”
The problem isn’t new, as a similar tale emerged in 2017.
The beauty of Bitcoin is also the greatest impediment for those who have lost or forgotten their password or key.
Bitcoin has no middleman or company you can turn to in order to recover a password. It is a decentralized digital currency with no central bank.
Launched in 2009, Bitcoin is the world's largest cryptocurrency. Unlike typical currency, Bitcoin “is created, distributed, traded and stored with the use of a decentralized ledger system known as a blockchain,” according to Investopedia.
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But its unusual structure is the bane of those who are locked out.
“They have been forced to watch, helpless, as the price has risen and fallen sharply, unable to cash in on their digital wealth,” the Times added.