One constantly reads about cryptocurrencies disappearing. In fact, about 20% of today's 18.5 million bitcoin is locked in accounts that no one enters, or lost in other ways.
The New York Times has just published an article about Stefan Thomas' 7002 bitcoin worth 2 billion Norwegian kroner, which is locked in an account to which Stefan does not remember the password. The key is on a small hard drive, a so-called IronKey, and can unlock a crypto wallet if Stefan should gain access.
Two more attempts
Unfortunately, he has only two attempts left to guess the password. IronKey gives the user ten attempts to remember the password, but Stefan has already tried eight times. The password was written down on a piece of paper that he had long since lost.
I'm LAYING IN BED AND THINKING OF THE PASSWORD, FINDING A NEW STRATEGY, TRYING A NEW PASSWORD, BUT NOTHING WORKS. I GO TO LEAVE, EVEN MORE, DESPERATE EVEN EARLIER. ”
Whether it is at all possible to hack into the disk instead of trying the password twice more, hangs in the air on Twitter:
We're not talking about some NSA-built cryptoprocessor installed on an SSBN, but an old $ 50 piece of consumer kit. There is no way it's hardened against the last ten years of USENIX papers that have never been used in practice.
- Alex Stamos (@alexstamos) January 12, 2021
It happens again and again
In 2019, we wrote about Mark Karpeles, CEO of a company that messed up 4 billion in cryptocurrency:
His company lost bitcoins for four billion kroner - now he has been found guilty of electronic manipulation
And seven years ago, a man lost 4 million pounds on a hard drive in a laptop that was lying under several meters of soil in a landfill in Wales.
Basically, it is not certain that these poor people have realized that it was so dangerous that the codes disappear at the moment, but tore their hair later when they have seen how some cryptocurrencies have taken off in recent years.
Lifelong tragedy
(Ill: Dmitri Demidko / Unsplash)
People who are banned from their accounts, as NYT writes, spend days, weeks, and years trying to get back in. At the beginning of Bitcoin, not many people believed that the currency would reach today's levels. But when they realize how many millions they could have in their account today, the loss becomes a tragedy that follows them for life.
Ordinary banks have solutions for what to do when you lose a password. And in the extreme consequence, you most often get through by showing your passport.
This is not necessarily the case with online crypto-wallets. The whole point of bitcoin is that anyone in the world can have a bank account with money that only they alone have authority over. Then it becomes important to remember the password.
As Stefan Thomas says in NYT:
“THE WHOLE IDEA THAT YOU ARE YOUR OWN BANK - YOU DO NOT MAKE YOUR OWN SHOES, DO YOU? THE REASON WHY WE HAVE BANKS IS EXACTLY THAT WE CANNOT BE ABLE TO MANAGE WITH ALL THE PRACTICAL SELF. ”
But he also points out that taking the risk yourself gives a lot of freedom - you become a world citizen with access to your own money from anywhere. Therefore, it is worth the risk.
Now Thomas has put the hard drive in a secret place, in case someone should come up with a way to open the drive. Keeping the counter far away helps him not to think so much about it in everyday life and not become completely insane.
You can read the whole article in The New York Times.