Around 20% of bitcoin is locked in ‘stranded wallets’

The New York Times reports that German-born programmer Stefan Thomas is sitting on a bitcoin fortune worth $200M, but can’t access it because he can’t remember the password to his digital wallet. The situation highlights how this problem is affecting a growing number of bitcoin holders who cannot cash in on their gains.

Why should we care?
Bitcoin in ‘stranded wallets’ amounts to around 20% of the existing 18.5 million bitcoin, currently worth around $140B, according to data from Chainalysis cited by The New York Times. Thomas, a former chief technology officer at blockchain firm Ripple Labs, was awarded 7,002 bitcoins worth $2-$6 each for making a cryptocurrency explainer video almost a decade ago. He has two more guesses left to figure out the password, which unlocks the keys to a hard drive called IronKey which contains the keys to a digital wallet. Once 10 incorrect guesses are exhausted, IronKey “seizes up and encrypts its contents forever.” The phenomenon has fueled the growth of companies focused on helping crypto holders trying to troubleshoot these challenges. Wallet Recovery Services, a business that helps find lost digital keys, told The New York Times it receives 70 requests a day from people who want assistance, three times the number of a month ago. “The secure and decentralized nature of bitcoin is great — until it collides with simple human forgetfulness,” wrote The Verge’s Ian Carlos Campbell on this challenge affecting some bitcoin holders.