According to The New York Times, Stefan Thomas, a San Francisco-based programmer, lost access to his Bitcoin because of a forgotten password. The private keys to his 7,002 Bitcoin now worth about $220 million, due to the recent price surge, is locked in a small hard drive called IronKey.
The IronKey wallet has a feature that allows owners who forget their passwords to attempt 10 guesses. Failure to get the password right on the 10th attempt, the wallet seizes up its contents [in this case, the private keys] indefinitely. Thomas revealed that he lost the paper where he stored the password to his IronKey harddrive and has just two attempts left, after desperately using up 8.
Talking about how he got the BTC, the programmer mentioned that an early Bitcoin fanatic gifted him the coins in 2011 as a reward for making an animated video, “What is Bitcoin?” which opened a lot of peoples’ eyes to Bitcoin. However, sadly he lost access to the coins that same year and since then hasn’t found a solution.
Why Take The Risk?
While it is true that some Bitcoin owners who lose their coins at one point, somehow recover them, it is also common knowledge that there are people like Thomas that never recover their Bitcoin. Why is the latter usually common?
Bitcoin’s technological structure is different from those of other digital currencies, making it risky. For traditional bank accounts and online wallets, there are password recovery features that can retrieve or replace passwords
However, Bitcoin gives individuals complete control over their money, impenetrable by even the government. Therefore there are no companies either to provide or store passwords.
But why do investors still go ahead and buy Bitcoin even with its risky nature? For one thing, people like having complete ownership of their wealth. Like Thomas mentioned, your Bitcoin is out of the control of any company or country, well unless you deposited them to a centralized custodian like exchanges.
Bitcoin’s privacy function has also come to the rescue of some citizens of countries like China and Venezuela, where it is common for government authorities to raid or shut down traditional bank accounts of some individuals.
The report also mentioned that apart from complete authority over your money, investing in Bitcoin results in enormous profits. These profits most times compensate investors for the huge losses they might have acquired when they lose the password to their Bitcoin.
Should a case of forgotten passwords prevent an investor from purchasing more Bitcoin? Although the answer depends on the individual, that wouldn’t be the better option. Thomas mentioned at the beginning, he did buy more Bitcoins and even started associating with Ripple in 2012 where he received XRP which rose in value until the recent setback.
Although owning Bitcoin like every other asset has risks, the solution lies in keeping your passwords safe. But in unfortunate situations of losing such passwords, the best thing to do is to store such a wallet in a safe place and like Thomas said, “Let it be in the past, just for your own mental health.”