Bitcoin is a digital currency that was created in the beginning of 2009 after the housing market crash. The asset promises its users low transaction fees and decentralized authority. Being a digital currency, there are no physical Bitcoins. Instead, there is a public ledger in which balances are kept that any user has access to. There is no paper trail, and the currency is not backed by any governments or banks.
Because Bitcoin does not have a federal backing, the price of the asset tends to fluctuate heavily. In 2017, the price of one coin skyrocketed to $20,000. Two years later, it fell to less than half of that amount. In March of 2020, right before the Coronavirus pandemic took the world by surprise, the price was as low as $3,300. Now, in January of 2021, Bitcoin’s price reached an all-time at $41,999. Many believe the currency’s gains are a result of the damaged and uncertain state of the economy.
This significant increase in price has created fortunes for many Bitcoin enthusiasts around the world. One such investor, Stefan Thomas, saw his fortune grow from $140,000 back in 2011 to $220 million. In 2011, the San Francisco CEO and software developer created and posted a video that explained exactly how digital currencies work. A bitcoin enthusiast then awarded him 7,002 Bitcoins. Over the past decade, his investment has appreciated over 157,000 percent, awarding him the title of Bitcoin millionaire. There is one caveat to his fortune, however, and a rather large one at that.
Back when Stefan was gifted his digital currency, he stored it on an IronKey, a USB hard drive with a digital wallet created for holding such assets. While there are better methods of storing cryptocurrencies currently, back then this was one of the only methods. The IronKey gives its user a total of 10 password guesses before it permanently encrypts its contents. Once encrypted, any digital assets inside are lost forever. Also, because Bitcoin is a decentralized system, you hold your assets like you would cash. They are not held with a bank, exchange, or any other institution. Therefore, if you lose it, you lose it. There is no recovery process.
Unfortunately for Stefan, his password has been lost over the years. He has currently used eight of his ten tries in an attempt to access his fortune to no avail. He is left with two tries before his wallet is encrypted forever. However, he is not the only investor in this predicament. In fact, The New York Times estimates that there is around $140 billion worth of Bitcoin locked up in wallets like these that are at risk of being lost forever.
Fortunately, there is one last glimmer of hope for those who are unable to remember their password. According to Stefan, “There is a way to take a scanning electron microscope and take apart the physical chip and literally go into the silicon chip and take away layer by layer, like a few atoms thick, and then read out the actual memory cells. And then with that technique, you should be able to bypass that limit of 10 tries, and then you can have a supercomputer try, you know, billions of passwords per second.” However, this method is highly expensive, and success is not guaranteed. That being said, will this bitcoin billionaire be able to recover his fortune? Or will it be lost forever in the depths of an encrypted crypto wallet?