Lost your bitcoin password? Call in the crypto-hunters
July 18 2018 - 05:14AM
ADVFN Crypto NewsWire
About $25bn worth of bitcoin is floating out there in the ether,
lost or ‘probably lost’
Three-and-a-half years ago, Roger Ver, a bitcoin evangelist so
vocal in his support for the cryptocurrency that he was nicknamed
the Bitcoin Jesus, showed me how to set up my own online bitcoin
wallet. He rounded off his demonstration by giving me £5 worth of
the currency. One day, he said, my holdings would be worth more
than £1,000.
I thought little more of it — until December last year when
bitcoin’s price rocketed and investors raced to cash out. My fiver
had ballooned to £400 but there was a problem: to access funds,
bitcoin holders need their unique “private key”, a long
alphanumeric password that serves a similar purpose to a bank-card
PIN. And I had lost mine.
Because of bitcoin’s decentralised nature — the cryptocurrency is
not issued or guaranteed by a bank — it is almost impossible to
recover these digital keys. There is no customer hotline, no
database that holds them, no way to reset them. So a misplaced
scrap of paper, missing USB stick or damaged hard drive can cost
bitcoin owners dearly.
According to data from the blockchain research company Chainalysis,
3.7 million bitcoin (about $25bn worth), is floating out there in
the ether, either lost or “probably lost” — meaning it is in
wallets that have been untouched for years, despite the price
spike.
Up to two million of this is thought to belong to Satoshi Nakamoto,
the currency’s creator, though some argue she or he could just be
sitting on it for now. Of the remainder, some owners are locked out
of enormous windfalls: according to Chainalysis, 300 wallets
contain between 1,000 and 10,000 bitcoin each. I have it easy with
my £400; imagine being unable to get your hands on between $6m and
$66m.
It’s no surprise then that a marketplace has sprung up to help
anguished souls break back into their treasure troves. There are
numerous websites that offer to hack into wallets by “brute force”,
using supercomputers to try endless combinations of passwords.
Alternatively, several so-called “crypto-hypnotists” promise to
help unlock your subconscious mind so that you can remember where
you wrote your password down. Most charge in crypto: South
Carolina-based hypnotist Jason Miller demands half a bitcoin
upfront, plus 5 per cent of the recovered amount, for three
sessions, available over Skype.
Others opt for a more DIY approach. Youssef Sarhan, an Irish
entrepreneur who bought several hundred dollars’ worth of bitcoin
in 2013, taught himself code in order to write a program to test
tens of millions of password combinations. To no avail, he tells
me. Worth close to $10,000 in December, his returns would have been
“not life-changing — but certainly year-changing”.
Graham Tonkin, chief growth officer at cryptocurrency intelligence
firm Mosaic, expects this field of “forensic archaeology” to
develop with new tools that we haven’t even thought of yet. More
broadly, he notes the “massive growth” of another industry:
custodians who will hold cryptocurrencies safely for you.
Many cryptocurrency exchanges now offer custody solutions — but
they are juicy targets for hackers. Other more specialised
third-party services, such as Vo1t, go to extreme lengths to ensure
security for their customers. Think private keys written on paper,
then split in two and placed in two separate vaults in bunkers
guarded 24/7.
As institutional players begin to dip their toe in the
cryptocurrency space, these services are becoming more popular.
“The analogy here is with gold,” says Philip Gradwell, Chainalysis’
chief economist. “I don’t keep my gold bars under my bed. I would
put them in a vault if I could.” This seems logical — although it
appears to go against the mission of the original bitcoin purists,
who hoped to create a system of exchange free from any
middleman.
Without a simpler way to hold and ensure the safety of crypto
assets, it’s hard to see how the digital currency will become more
widely adopted for everyday payments. In the meantime, I’m going to
have one last hunt for the notebook that might contain my
password.
Hannah Murphy
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