Trillions in Bitcoin locked away due to lost or forgotten passwords

by Hanno Labuschagne | MYBROADBAND

Around R2.13 trillion’s worth of Bitcoin is locked away due to its owners losing or forgetting the passwords to the wallets which hold their virtual currency, a report from the New York Times has claimed.

The report stated that information from cryptocurrency data firm Chainanalysis showed about 20% of the 18.5 million Bitcoin currently in existence appears to be in lost or stranded wallets.

The cryptocurrency has surged dramatically in recent weeks, more than doubling its value from the start of December to reach a record high of $42,000 on 7 January.

Numerous Bitcoin owners have supposedly been watching helplessly as the value of their fortune exploded, but they were unable to access their wallets because they could not remember their passwords.

A company which specialises in helping people recover their lost digital keys – Wallet Recovery Services – told the NYT it has been receiving three times the typical number of requests per day from people hoping to regain access to their digital wealth.

While most conventional online financial or banking accounts allow for the resetting of a forgotten password, Bitcoin offers no such mechanism.

This is because of the cryptocurrency’s decentralised nature, which means the digital wallet that stores Bitcoin functions independently from an exchange, bank, or any kind of financial institution.

The big losers

San Francisco-based software developer Stefan Thomas is one of the unfortunate individuals who cannot access his Bitcoin wallet.

Thomas has been making headlines after he forgot the password to his wallet holding 7.002 Bitcoin – worth around $251 million (R3.82 billion).

His Bitcoin’s private key is held on a hard drive which allows 10 chances to type in the correct password before being wiped. Thomas only has two tries left.

James Howells, an IT engineer from the UK, is another man looking to recover 7.005 of Bitcoin currently worth around $256 million (R3.9 billion).

Howells had accidentally mistaken the hard drive containing his Bitcoin’s cryptographic key for an identical laptop drive and trashed the wrong one while cleaning his house back in 2013.

He still has hope that the hard drive’s platter is intact and that his Bitcoin can be recovered.

In his efforts, he has even gone as far as offering the Newport City Council a £52.5 million (R1.1 billion) donation to be distributed to its citizens in exchange for permission to excavate a certain part of a landfill where he believes the hard drive could be.

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