German police are learning all about the benefits of cryptocurrency first-hand, namely how frustratingly secure the damn thing can be at the most inconvenient times, as they find themselves unable to access approximately 1,700 Bitcoin (AU$85 million) without the necessary password.
The digital wallet was seized from a man who unlawfully installed Bitcoin mining software on other peoples’ computers, slowly accumulating them capital ₿s. While the fraudster has since been sentenced to jail and served his full term, the confiscation has proven to be a greatly symbolic and largely futile exercise.
“We asked him but he didn’t say,” prosecutor Sebastian Murer tells Reuters, speaking about the missing password in question.
“Perhaps he doesn’t know.”
While this development certainly shines a spotlight on where new technology comes into direct conflict with the long – yet often ungainly – arm of the law, being denied access to millions in cryptocurrency, Bitcoin or otherwise, isn’t exactly virgin territory (nor an isolated incident).
Earlier this year, The New York Times profiled San Francisco programmer Stefan Thomas, who was paid 7,002 Bitcoin for his services years ago (AU$365 million). Ordinarily, this life-changing sum would be cause for celebration… if it weren’t for the fact he somehow managed to lose the password to his IronKey secure hard drive.
Despite having once recorded the password the analogue way – i.e. on a piece of paper – this precaution has also proven to be a greatly symbolic and largely futile exercise given Thomas has no idea where said piece of paper is. To make matters worse, Thomas has exhausted eight of his ten guesses, meaning he only has two shots left before his millions are encrypted forever.
“I would just lay in bed and think about it,” says Thomas.
“Then I would go to the computer with some new strategy, and it wouldn’t work, and I would be desperate again.”
According to cryptocurrency data firm Chainalysis, of the existing 18.5 million Bitcoin in circulation, a considerable 20% are either stranded or lost. As of January 13th, that ghost portion was estimated to be worth approximately AU$180 billion. In line with this trend alongside Bitcoin’s rising value, businesses specialising in tracking down missing keys such as Wallet Recovery Services have been receiving over 70 requests a day – three times the amount from a month ago.
At the time of this writing, Bitcoin is trading at AU$50,859.