Top 3 Stories of Lost Bitcoin Fortunes

Bitcoin can make you a millionaire, provided you keep access to your wallet.

With a market cap of $380 billion, Bitcoin has established itself as the most prominent cryptocurrency today. While Bitcoin continues to dominate the crypto market, its price crashed from an all-time high of over USD 68,000 in November 2021 to USD 19,775 a year later, and people are pulling their hair out, and some have even attempted suicide.

But perhaps those who have experienced the most significant losses in Bitcoin are not people who have lost money, but those who have lost access to their Bitcoin investments. If you’ve ever felt frustrated about losing a password or throwing away an important document, just wait to hear how these people lost millions of dollars worth of Bitcoin for the same reason.

James Howell’s lost hard drive

In 2013, 36-year-old engineer James Howell threw away the hard drive containing the cryptographic key to his Bitcoin wallet while cleaning out his house. Howell used to have two identical hard drives and ended up misfiring, locking himself out of his 8,000 BTC holdings, which would be worth close to US$158 million at current exchange rates.

This hard drive ended up in a landfill in New Port, Wales. Howell has been trying to get permission to excavate the fill to retrieve the lost station for nearly a decade without success. The local government of New Port believes that attempts to excavate the station would have a negative impact on the environment and has therefore firmly rejected his requests.

Things took an interesting turn this year. Howell brought in venture capitalists (VCs) Hanspeter Jaberg and Karl Wendeborn to finance his digging attempt using robotic dogs, as well as a team of eight experts in data mining and landfill digging. This latest effort to extract the hard drive would cost the VCs $11 million. If the drive is successfully sourced, the VCs will receive $50 million worth of Bitcoin. Howell intends to keep 30% of the rest of the properties, give another 30% to those working on the excavation and also give US$60 to each resident of New Port.

Stefan Thomas’s lost password

Former Chief Technology Officer (CTO) of Ripple, Stefan Thomas, made headlines in 2021 for forgetting the password to the hard drive that contained the key to his Bitcoin wallet. The hard drive, known as the Iron Key, is designed to be impervious to all attacks and allows users only ten attempts before being permanently locked out of the drive. As of 2021, Thomas is down to his last two attempts.

The Bitcoin wallet that Thomas does not have access to contains 7,200 BTC, which would be worth over $142 million today. According to Thomas, the only other way to retrieve the information would be to break the drive apart, remove the chip and put it under a scanning electron microscope to read the individual flash memory cells.

However, this process will require a lot of time and money and even after that there are chances that he will not be able to retrieve the information. Thomas has been trying to log on to the hard drive since 2012 and says he has now made peace with the loss.

Individual Xs Bitcoin Hacking Challenge

If you are a frequent reader of our site, you will be familiar with how the crypto space has its fair share of hackers and cybercriminals. Many cyber criminals steal crypto wallets and try to unlock them to access the money inside. If they don’t succeed in cracking the passwords, they sell them to other hackers.

The same had happened to Individual X’s wallet, the seventh largest Bitcoin wallet in the world. As far back as 2018, it had been doing the rounds among hackers, who would pry open the wallet to gain access to the 69,000 BTC (worth over $1.18 billion at current exchange rates) it contains.

The blockchain analysis carried out by Chainalysis on this wallet found that all the funds inside had been sent via transactions from the dark web marketplace Silk Road. The site was used for money laundering and drug trafficking until the Federal Bureau of Investigation shut it down in 2013. The site’s founder, Ross William Ulbricht, was arrested that year and has since served a life sentence. While Silk Road was still online, an unnamed individual, referred to as Individual X by authorities, had stolen from Ulbricht by manipulating a security loophole on the site.

As of 2020, US federal authorities have seized all the funds in Individual X’s wallet. In 2021, the government signed an agreement with Ulbricht that a portion of the seized Bitcoins would be used to pay $183 million in restitution as part of his sentence.

These are just a few of the many cases of lost Bitcoin fortunes. As of 2021, 20% of all Bitcoin is either lost or in wallets that are no longer accessible. These stories tell us that privacy and security are a double-edged sword. While the private keys used to access Bitcoin keep them secure, the wallet can become permanently inaccessible if the user forgets their key.

Ultimately, it is important that strong security measures are in place to keep Bitcoin safe. So all we can do is be careful with our belongings and keep track of all our passwords so we don’t end up in the same situation as Thomas or Howell.

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