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Stefan Thomas, a German-origin programmer living in San Francisco, has two passwords left to detect passwords worth about $ 220 million this week.
The password will allow him to unlock a small hard drive, known as IronKe, which holds the private key of a digital wallet containing 7,002 bitcoins. While the price of bitcoin declined sharply on Monday, it is still just over 50 percent One month ago, When it passed its previous all-time high of $ 20,000.
The problem is that Mr. Thomas lost the paper years ago where he wrote the password for his IronK, which seizes users before 10 guesses and encrypts its contents forever. He has since tried eight of his most used password totals – to no avail.
“I’ll just lay in bed and think about it,” Mr. Thomas said. “Then I’ll go to the computer with some new strategy, and it won’t work, and I’ll be desperate again.”
Bitcoin, which has been on an extraordinary and volatile eight-month run, has made its holders very prosperous Some time, Even as the coronavirus virus epidemic devastated the world economy.
But the unusual nature of cryptocurrency also means that many people run out of their bitcoin fortunes as a result of lost or forgotten keys. They are forced to watch, helpless, as there is a rapid decline in value and are unable to capitalize on their digital wealth.
Of the current 18.5 million bitcoins, about 20 percent – currently around $ 140 billion – appear in lost or otherwise stranded purses, according to cryptocurrency data firm Chainalysis. Wallet Recovery Services, a business that helps find lost digital keys, said it used to receive 70 requests a day from people who wanted help recovering their funds, a number a month earlier. Three times.
Bitcoin owners who are out of their wallet speak of endless days and nights of despair as they try to reach their luck. Many have owned coins since the early days of bitcoin a decade ago, when no one believed the token would be anything.
Brad Yasser, a Los Angeles entrepreneur, said, “Over the years I would say that I have spent hundreds of hours trying to get back into these wallets. There are some desktop computers that contain thousands of bitcoins that they created, or mined. Early in technology. Day. While those bitcoins now cost hundreds of millions of dollars, he lost his passwords several years ago and placed the hard drive in a vacuum-sealed bag that was out of sight.
He said, “I don’t want to remember every day that I have a fraction of what I have.”
The dilemma is a stark reminder of Bitcoin’s unusual technical weaknesses, which sets it apart from ordinary money and gives it some of its most majestic – and risky – qualities. With traditional bank accounts and online wallets, banks such as Wells Fargo and other financial companies like PayPal can provide people with passwords for their accounts or reset lost passwords.
But bitcoin has no company to provide or store passwords. The creator of the virtual currency, a shadowy figure known as Satoshi Nakamoto, has stated that the central idea of bitcoin was to allow anyone in the world to open a digital bank account and hold money in a way that any government Could not withhold or regulate.
This is made possible by the structure of Bitcoin, which is governed by a network of computers that agree to follow all the rules software for cryptocurrency. The software includes a complex algorithm that makes it possible to create an address, and the associated private key, known only by the person who created the wallet.
The software allows the bitcoin network to verify the accuracy of the password to allow transactions, without seeing or knowing the password. In short, the system makes it possible for anyone to create a bitcoin wallet without registering with a financial institution or through any type of identity check.
Who created bitcoin Is popular with criminals, Who can use the money without disclosing their identity. It has also attracted people to countries such as China and Venezuela, where authoritarian governments are known to print or close traditional bank accounts.
But the structure of this system simply did not take into account how bad people can be in remembering and securing their passwords.
“Even sophisticated investors have been completely unable to manage any kind of private keys,” said Diogo is the co-founder of Monica, a start-up called Anchorage, which helps companies handle cryptocurrency security. Mr. Monica started the company in 2017 after helping him reclaim a hedge fund for one of his bitcoin wallets.
Mr. Thomas, the programmer, said that he was ready for bitcoin partly because it was Out of control of a country Or company. In 2011, while he was living in Switzerland, he was given 7,002 bitcoins as a reward for creating an animated video by an early bitcoin fanatic, “What is bitcoin?, ”Which introduced the technique to many people.
That year, he lost digital keys to a bitcoin-holding wallet. Since then, as the value of bitcoin has risen and fallen and he could not get his hands on the money, Mr. Thomas has sourced the idea that people should have their own bank and keep their own money needed.
“That’s the whole idea of having your own bank – let me do it this way: Do you make your own shoes?” he said. “The reason we have a bank is that we don’t want to deal with everything that banks do.”
Other bitcoin believers have also realized the difficulties of having their own bank. Some have outsourced the work of holding bitcoins to start-ups and exchanges that secure private keys for virtual currency theft.
Yet some of these services have had a lot of trouble getting their keys. Bitcoin has one of the largest exchanges in the last few years – including a lifetime famous exchange Mount gox – Lost personal keys or stolen them.
An entrepreneur from Barbados, 34-year-old Gabriel Abed lost about 800 bitcoins – valued at around $ 25 million – when a coworker repaired a laptop that contained a private key to a bitcoin wallet in 2011.
Mr. Abed said that this did not diminish his enthusiasm. Prior to bitcoin, he said, he and his fellow Islanders did not have access to affordable digital financial products such as credit cards and bank accounts that are readily available to Americans. In Barbados, it was almost impossible to get even a PayPal account, he said. The open nature of bitcoin, he said, gave him full access to the digital financial world for the first time.
“The risk of having my own bank comes with the reward of being able to access my money independently and being a citizen of the world – it’s worth it,” Mr Abed said.
For Mr. Abed and Mr. Thomas, any loss from misappropriation of private keys has been partially assimilated by the huge gains made on bitcoin. The 800 bitcoins Mr. Abed lost in 2011 were a small portion of tokens bought and sold, allowing him to buy 100 acres of seaside land in Barbados recently for more than $ 25 million.
Mr Thomas said he managed to get a hold on enough bitcoins – and remember passwords – than giving him more money than he knows what to do with. In 2012, he joined Ripple, a cryptocurrency start-up, aimed at improving bitcoin. He was rewarded with his original currency of Ripple, known as XRP, which rose in value.
(Ripple recently did Run into legal troublesIn part because the founders had a lot of control over the manufacture and distribution of XRP coins.)
For his lost passwords and inaccessible bitcoins, Mr. Thomas has put IronKay in a secure facility that – he wouldn’t say – cryptographers come up with new ways to crack complex passwords. Keeping it away helps them try not to think about it, he said.
He said, “I reached a point where I told myself, ‘Let it be in the past, just for my mental health.”