Great article about the poor souls who lost their bitcoin passwords…
Bitcoin has had quite a week. On Thursday, the cryptocurrency surged past $19,000 a coin before dropping down to $15,600 by Friday midday. The price of a single Bitcoin was below $1,000 in January. Any investors who bought Bitcoins back in 2013, when the price was less than $100, probably feel pretty smart right now.
But not all early cryptocurrency enthusiasts are counting their coins. Instead they might be racking their brains trying to remember their passwords, without which those few Bitcoins they bought as an experiment a few years ago could be locked away forever.
That’s because Bitcoin’s decentralization relies on cryptography, where each transaction is signed with an identifier assigned to the person paying and the person receiving Bitcoin. It’s how the system is able to process large transactions without a central bank, since each exchange is guaranteed by authenticating when money is going from one wallet to another using both public identifiers and private passcodes, and no one can access your Bitcoin wallet without your private password. If someone else somehow had your password and swiped your coins, they’re gone for good. Passwords are used to unlock your bitcoin wallet address, and if you forgot your password, those coins are locked away. There’s no central point of control to help retrieve your Bitcoin or change your password. If there was an easy means of cracking open people’s Bitcoin wallets when a password was lost, the cryptocurrency would be worthless, since the whole point is security without centralization.
“I’ve tried to ignore the news about Bitcoin completely,” joked Alexander Halavais, a professor of social technology at Arizona State University, who said he bought $70 of Bitcoin about seven years ago as a demonstration for a graduate class he was teaching at the time but has since forgotten his password. “I really don’t want to know what it’s worth now,” he told me.
“This is possibly $400K and I’m freaking out. I’m a college student so this would change my life lmao,” wrote one Reddit user last week. The user claimed to have bought 40 bitcoins in 2013 but can’t remember the password now.
“A few years ago, I bought about 20 euros worth of bitcoin, while it was at around 300eur/btc.,” lamented another Reddit user earlier this week. “Haven’t looked at it since, and recently someone mentioned the price had hit 10.000usd. So, I decided to take a look at my wallet, but found that it wasn’t my usual password. I have tried every combination of the password variations I usually use, but none of them worked.”
Another Redditor said he or she had so much inaccessible Bitcoin after to losing the wallet identifier that the poster offered $20,000 to anyone who could recover the Bitcoins. These stories are starting to rack up on Reddit—and it’s possible some are hoaxes—as Bitcoin’s incredible climb jogs their memories of buying $9 of cryptocurrency on a lark.
Others are trying to access the Bitcoin wallets of people in their family who have died and apparently taken their Bitcoin passwords to the grave. In one particularly sad case on Reddit on Thursday, a person shared a story about how their brother-in-law, who was an early investor in Bitcoin and took his own life, leaving his wife and six-month-old in great financial need. The family had his computer, but no instructions for how to retrieve the Bitcoin, which could be extremely valuable now.
All of which means if you or someone you love is riding high on a Bitcoin investment you made when everyone thought it was just a geeky fad, it’s probably best to make sure the password is stored somewhere safe and retrievable, at least to one other person. Life comes at you fast.