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Bitcoin blunder, forgotten password cost user hundreds of millions says New York Times author

Published: Jan. 15, 2021 at 9:55 AM AKST
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ANCHORAGE, Alaska (KTUU) - Imagine if you can that you purchased the winning Powerball ticket this month with an estimated payout of $640 million dollars. Think of the dreams you might have for the money, the myriad of ways it could change your life. Now imagine that even though you know where the winning ticket is, you can’t access it, you have no way to turn it in, and as such you have no way to collect your fortune. That’s the crazy reality that faces some Bitcoin owners.

Nathaniel Popper, who covers finance and technology for the New York Times, recently published an article titled “Lost Passwords Lock Millionaires Out Of Their Bitcoin Fortunes.”

“It’s interesting as you talk to these people that have lost these passwords that are literally worth millions of dollars, a lot of them have these wallets that they created early on in bitcoins existence when the bitcoins were worth a few pennies maybe a few dollars,” says Popper.

The article opens up with the story of Stefan Thomas who owns a digital wallet that has more than 7,000 Bitcoin in it.

“He just didn’t think of it as something that was going to be worth a lot of money someday,” says Popper.

The value of Bitcoin tends to fluctuate constantly but that 7,000 Bitcoin is now worth well over $200 million. Unfortunately for Thomas, he doesn’t know the password to access a fortune that is rightfully his. Instead, it is locked in a hard drive and this specific drive has a safety feature where, if you get the password wrong ten times, it encodes all the information on the drive permanently. So far Thomas has made eight wrong guesses which means he only has two tries left before it’s gone forever.

“Anybody that’s looking at a hard drive or a thumb drive that’s containing $240 million you know is just going to be racking their brain. It doesn’t matter the origin story of that money you’re looking at that thing and thinking if I can just remember the password or find a piece of paper where that password is written I can get that money,” says Popper.

Since publishing his story Nathaniel, who’s spent a lot of time covering and writing about cryptocurrency, says the reaction to this specific piece has been visceral.

“It caused people stress and anxiety just to read about it so I think you can only imagine what it’s like when you’re sitting there trying to remember, trying to think of some way to recover that.”

With so much money on the line, an entire cottage industry has sprung up around the password recovery of Bitcoin. Companies like Wallet Recovery Services do everything they can to try and help Bitcoin owners get into various password-protected devices that may contain old Bitcoins.

“This business that helps people recover their passwords, they are currently getting like 70 requests every single day,” says Popper.

As the most well-known of the cryptocurrencies soars past $30,000 even $35,000 per Bitcoin it’s no surprise that those who got in early and perhaps, for a time, even forgot they had any Bitcoin are now scrambling. It is estimated that north of $100 billion in Bitcoin is out there in the world, in laptops, hard drives, perhaps an old PC, and in most cases, it’s just gone.

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