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Lost passwords: the bane of crypto

Photo of: Nathan VDH
by Nathan VDH

Approximately 20% of the Bitcoin in circulation would be lost today due to the loss of the password giving access to the cryptocurrencies. This would represent approximately $140 billion.

What if the largest Bitcoin holders were currently those without access to this fortune? According to an article in the New York Times, no less than 20% of the BTCs in circulation would indeed be lost.

In a December report, Glassnode estimated the number of Bitcoin available at 18.6 million. Of these, about 3 million would be lost. Why would this happen? Mainly because of the loss of the private keys giving access to this Bitcoin.

This misadventure is not uncommon indeed, as the NYT reports. The site reports in particular the testimony of a developer from San Francisco. In theory, Stefan Thomas is the proud owner of 7002 Bitcoin.

This heritage is now close to 220 million dollars. Problem, the private keys are kept on an IronKey terminal, whose password he lost. The password was on a piece of paper that had disappeared years before.

But Stefan Thomas is not an isolated case. The estimated value of Bitcoin lost in this way would be about 140 billion dollars. And with the soaring price of cryptocurrencies, many holders are hoping to regain access to their BTCs.

Wallet Recovery Services, a company that helps recover valuable digital keys, is currently overwhelmed by requests from individuals. It receives 70 such requests per day. That’s three times more than a month ago.

The chances of success are slim, however. “Over the years, I’d say I’ve spent hundreds of hours trying to get those wallets back,” says one Los Angeles entrepreneur. He owns several computers containing thousands of BTCs.

But without the passwords, the hundreds of millions of dollars in fortune remains out of his reach. A real source of frustration and regret. With Bitcoin, individuals have become their own bank. And beware of those who misplace their precious sesame.

“The risk of being my own bank comes with the reward of having free access to my money and being a citizen of the world – it’s worth it,” one user prefers to emphasize. In 2011, he lost 800 Bitcoin after reformatting a computer.

In the hope of one day recovering this money, unfortunate cryptocurrencies holders keep hard drives and USB sticks in a safe place. They hope that methods will eventually be found to break passwords.