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What happens if one loses a Bitcoin key?

  • January 14, 2021 04:07 AM AEDT
  • Edita Ivancevic
    Journalist Edita Ivancevic
    212 Posts

    Edita is a young journalist who graduated in 2019 from the Faculty of Political Science in Zagreb, Croatia, specialising in Television and Public Relations. Since the teenage years, Edita gained knowledge of news reporting and analysing complex curre...

What happens if one loses a Bitcoin key?

Image Source: Shutterstock

Summary

  • A San Francisco-based computer professional Stefan Thomas is the owner of 7,002 Bitcoins, which means he has about A$283 million at disposal.
  • However, Mr Thomas lost the password years ago.
  • If the unlucky individual does not guess the correct key combination, Mr Thomas will never be reunited with his mass wealth.
Gold MTF non-AMP

Recovering a password on most social media channels, streaming services, forums, emails, and so on, is relatively simple.

Firstly, one needs to report a forgotten password, usually by clicking “Forgotten Password?” or a similar variant of the phrase.

In the next step, a password recovery link is sent directly to the individual’s private email. This enables the person to reset the password and unlock the account.

However, recovering the password is not the same on a blockchain technology, especially when logging into a Bitcoin wallet.

ALSO READ: What is a cryptocurrency and how to use it?

So, what happens when an individual forgets or loses his/her Bitcoin key?

Well, ask Stefan Thomas.

Thomas, a German-born IT developer, has two more chances left to unlock his Bitcoin wallet before he loses approximately A$283 million forever.

The San Francisco-based programmer is currently a holder of 7,002 Bitcoins, which are safely stashed in a hard drive called IronKey.

Unlocking the IronKey would give Mr Thomas a full access to his cryptocurrency fortune. Of course, if he guesses the key on time.

             Image Source: Shutterstock

Bitcoin has been experiencing all-time highs in recent weeks, hitting its peak at A$52,375.1 on 8 January 2021.

However, the cryptocurrency has started to lose steam as its price dropped in value by more than US$10,000. However, it is still worth more than double in price than pre-pandemic levels.

RELATED: Bitcoin drops by US$10,000 from the top; is momentum fading?

What is the problem with Mr Thomas’s key?

After opening an account where one stores Bitcoins, blockchain technology requires everyone to create a private key, known only to the account holder.

There is a significant catch if the individual loses the private key – the password is gone forever, and so is the hope of ever accessing Bitcoin assets.

Mr Thomas is almost at the point of no return, as he has two more chances to unlock the hard drive containing a significant amount of the powerful cryptocurrency.

When the IT developer chose his private key, he decided to write it down on a piece of paper, which no hacker could ever take advantage of. Yet, Mr Thomas lost it years ago and has been trying to log into IronKey ever since.

Speaking to New York Times, Mr Thomas narrated his ordeal explaining how  after failing to guess the right combination every time, he would get even more desperate:

While Mr Thomas is still not completely certain that he will ever gain access to his multimillion-dollar fortune held in Bitcoin, he can only hope that the password combination will eventually be the winning one.

During the pandemic, Bitcoin witnessed a historic rally and made many of its users extremely rich, especially because the cryptocurrency was almost immune to the unprecedented events that roiled several financial markets.

According to Chainalysis, around 20 per cent of all mined Bitcoins (18.5 million) are long-forgotten and no longer accessible due to lost keys. The company estimated that a whopping fortune of US$140 million might never be recovered due to lost passwords.

 


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