Lost Bitcoins: how to lose $260 million in Bitcoin?

Written by Anna Komashko
Written by
Investing reporter
ECOS community manager...
3   min.
Crypto news 

It is no longer surprising that there are huge funds in the cryptocurrency sphere. Surprisingly, billions are lost in this market for ridiculous reasons: people forget ewallet passwords, break or throw away old hard drives.

$140 billion worth of lost Bitcoins are stuck on blocked e-wallets whose owners have forgotten their passwords, the New York Times reported. Unlucky crypto owners have lost about a fifth of all the bitcoins in the world. Considering that the cost of bitcoin is about $ 40 thousand per coin, some have lost their entire fortunes. Losing other cryptocurrencies is no less offensive because their rate has grown significantly over the past few months.

Lost Bitcoins of Stefan Thomas

Recently, the world media replicated the heartbreaking story of Stefan Thomas, a programmer from San Francisco. He lost the password from the hard disk that stores the keys to an electronic wallet with 7 thousand bitcoins. The market value of these coins is about $ 268 million. So Stefan could be on the Forbes list. But he was out of luck.

Stefan became the happy owner of digital coins ten years ago. In 2011, he published an educational video “What is Bitcoin?”, And one cryptocurrency fan in gratitude transferred 7,002 bitcoins to him. At that time, one bitcoin was worth $ 1. Thomas put the keys to the wallet on a secure disk and wrote down the password for it on a piece of paper, which he later lost. The hard disk allows ten attempts to enter the password, and if none of them fit, the disk erases the data forever. By the time the whole world learned about the programmer’s history, he had entered the wrong password eight times.

Now the whole Internet gives Stefan advice. Former Facebook security director Alex Stamos offered to help him save an e-wallet for 10% of the amount. However, there is little chance of a happy outcome for this story. If you do not remember the correct password, the blockchain cannot be fooled. This is the disadvantage and advantage of such decentralized systems. This is probably why about 4 out of 21 million bitcoins are lost.

There are three most common mistakes when handling digital coins:

  1. The first mistake is to forget the seed phrase or write it down and lose it. The most classic story: bitcoins were bought a long time ago, no one remembered them for years, and then growth begins, and the owner remembers that he has bitcoins on his old laptop. Now they would cost a couple of million dollars, but the password for them is lost.
  2. The second mistake is to pay for services without checking the recipient’s address and send coins to nowhere.
  3. The third mistake is to strengthen the protection when logging into the cryptocurrency exchange account using two-factor authentication and accidentally erase the application on the smartphone that generates these one-time login codes.

Loss of access to a crypto wallet is a typical problem for many market participants, especially non-professional ones. The main enemy here is the forgetfulness and inattention of users.

Therefore, the most effective recipe for protecting your crypto wallet from yourself is only one: to be serious about storing passwords. If the wallet is stored on your device, an encrypted file becomes the key to it. For each key, an English passphrase of about ten words is generated. If the file is lost and the key is lost, it can be restored using this phrase.

Also, a common protection method is to store a copy of the key in the cloud storage. It’s easier for those users who have chosen the ECOS online wallet: in this case, the company itself is responsible for storing and protecting the cryptocurrency. The owner of such a wallet usually does not have keys; he just uses the login and password to enter the site, confirms his identity using two-factor authorization, just like when working with the Internet bank.

Restoring access to online wallets is done as standard using e-mail, SMS, and identity verification, which can take time. ECOS Wallet is the most secure way to store your crypto assets.

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