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stefan thomas is a bitcoin millionaire. Or it would be if he could remember his password.
Reading: Lost bitcoin stories
The software developer and CEO from San Francisco was an early adopter of Bitcoin. In 2011, he produced an animated video explaining how digital currency works. For his efforts, a bitcoin enthusiast awarded him 7002 bitcoins.
Later that year, he lost the password to his iron key, the USB hard drive that contains the digital wallet that stores his bitcoins. Since then, the value of the coin has skyrocketed and Thomas’s holdings are worth $220 million US dollars ($321 million Canadian dollars)
the iron key gives users 10 password attempts before their content is permanently encrypted, and thomas’s bitcoin is lost forever. you have two attempts left.
here is part of his conversation with host carol off.
stefan, how can a lousy password come between you and hundreds of millions of dollars?
yes, that’s a very good question, isn’t it?
Okay, this happens, right? We all know that we lose our passwords. and then a little thing comes up when we go to our bank or whatever [it says], “forgot your password?” and then you press it and then you go through a business of changing your password. So that’s not available to you?
not. bitcoin is a decentralized system. So if you keep your bitcoins, like I did, in a completely separate wallet, meaning not with an exchange, not with a bank, not with any kind of institution, but with yourself, then it’s like cash. It’s like gold if you lose it, you lose it. there is no recovery process for that.
Since then, a lot of people have come up with all sorts of clever solutions like, you know, metal wallets where you can store your secret keys and stuff like that. but most of that didn’t exist back then. back then, you had to find your own solution. and apparently I didn’t do a very good job of it.
we know that this has been a very good year for bitcoin. How many people do you think cannot access their fortunes?
In the new york times article on this, they had an estimate, which was something like [$140 billion dollars ($178,258,500 cdn)] locked up in these wallets. so you can imagine there are probably hundreds of thousands if not millions of people in my situation.
but I think they said that 20 percent of all bitcoin accounts are owned by people who can’t access them [according cryptocurrency data firm chainalysis].
yeah, I think a lot of that, especially some of the bigger ones, were very old wallets. so, you know, at the time, it could have been less money.
In my case, it was $140,000 ($179,000 cdn), which to me was a huge amount, like an incomprehensible amount, even then. but of course, you know, once you can’t access it and the price goes up, the number just gets bigger and bigger.
so, how is it for you? I mean, how many sleepless nights do you have thinking about the fact that you have $200 million that you can’t get?
After realizing that I lost the coins, I was completely devastated. like, when I think about it, it’s hard to even understand how I felt that couple of weeks.
and I tried everything. I’d stay up all night trying different ideas on how to get it back, or just staring at the ceiling for hours. you know, just what you imagine you would do if you lost that kind of money.
And then after a couple of weeks of that, I got to a point where I started to realize that the chances of recovery weren’t very good. and we’ll get into, you know, what’s that last glimmer of hope in a bit.
So I had to make a decision, right? like, or do I let this define the rest of my life and I keep thinking about it and just, you know, like you said, I lose sleep over the rest of my life, or do I just, you know, face the fact that this money it’s gone, these bitcoins are gone, and I go ahead and go back to work. and I chose the latter.
okay, what’s the last glimmer of hope?
the famous usb memory with 10 attempts.
Is there a way to take a scanning electron microscope and take apart the physical chip and literally go into the silicon chip and peel it off layer by layer, like a few atoms thick, and then read the actual memory cells. and then with that technique you should be able to bypass that 10 try limit, and then you can have a supercomputer try, you know, billions of passwords per second.
Now, the problem is that, in the first place, that requires a specialized laboratory. It is very expensive. only a few people in the world can do it. and even then, it’s kind of high risk. it might just fail, and then the chip is destroyed and you don’t get a second try.
Back then, it definitely wasn’t worth it. I think now it’s probably worth it. but it still requires a lot of organization and logistics, and even then it’s not guaranteed.
Now that this has been in the news, a lot of people are reaching out, some of whom are the kind of people who have access to that kind of equipment and the kind of experience needed. so I’m talking to them to see if we should try a recovery and how much it would cost etcetera.
so what happens? I mean, hundreds of millions of dollars are now locked up… where does it go? who receives it?
Because I’m not selling those bitcoins, that means there’s a little less supply in the market…and therefore potentially the price is infinitesimally higher, right?
other holders, in theory, benefit. although you have to imagine, because of this risk, there may be people who may not invest in bitcoin because they are concerned about this. and maybe that will make up for it and bring the price down. so again, that’s probably a better question for an economist to weigh in on.
There are those who say that this now only belies the value of investing in this type of bitcoin. for all the advantages it has, that you don’t have to deal with institutions and governments, which obviously has its pitfalls. and so are you one of those? Are you one of the people who thinks that perhaps this type of currency is not a good idea?
this experience has definitely changed my opinion about bitcoin in terms of me being one of those people who was really excited about, you know, everybody can be their own bank and that sort of thing.
I know there are a lot of bitcoin experts out there listening right now saying “this could never happen to me!” but for me personally, I felt very honored by that experience.
Nowadays, I think it is very good that we live in a free country where we can choose and we can have our own bitcoins if we want. and I think that is a right that I would fight to preserve. there have been some discussions in the us. about maybe not allowing that in the future, and I think that’s something I’m absolutely against.
But at the same time, I think in practice, for most people, it’s probably best to keep your bitcoins with a custodian, such as an institution that specializes in securing and storing bitcoins.
written by sheena goodyear. interview produced by chloe shantz-hilkes. questions and answers have been edited for length and clarity.