Bitcoin Millionaire unable to access over $300 million because he lost his password

Stefan Thomas is a bitcoin millionaire. Or, he would be if only he could remember his password.

The San Francisco software developer and CEO was an early adopter of bitcoin. Back in 2011, he produced an animated video explaining how the digital currency works. For his efforts, a bitcoin enthusiast awarded him 7,002 bitcoins.

Later that year, he lost the password to his IronKey, the USB hard drive that contains the digital wallet that holds his bitcoins. Since then, the currency’s value has skyrocketed, and Thomas’ holdings are worth $220 million US ($321 million Cdn.)

The IronKey gives users 10 password guesses before it encrypts its contents permanently, and Thomas’ bitcoin is lost forever. He has two guesses left.

Here is part of his conversation with As It Happens host Carol Off.

Stefan, how is it possible that one measly little password stands between you and hundreds of millions of dollars?

Yeah, it’s a really good question, isn’t it?

OK, this happens, right? We all know we lose our passwords. And so a little thing comes up when we’re going to our bank or whatever [that says], “Did you forget your password?” And then you push it and then you go through a business of changing your password. So that’s not available to you?

No. Bitcoin is a decentralized system. And so if you hold your bitcoins, like I did, in a completely independent wallet — so not with an exchange, not with a bank, not with any kind of institution, but yourself — then it’s just like cash. It’s like gold. If you lose it, you lose it. There’s no recovery process for that.

Since then, a lot of people have come up with all kinds of clever solutions like, you know, metal wallets where you can put down your secret keys and things like that. But most of that didn’t exist back then. Back then, you had to kind of come up with your own solution. And apparently I didn’t do a very good job of that.

I tried everything. I would stay up all night trying different ideas for how to recover it, or just, like, staring at the ceiling for hours.
– Stefan Thomas, software developer
We know that this has been a very good year for bitcoin. How many people do you think are not able to access their fortunes?

In The New York Times article about this, they had an estimate, which was something like [$140 billion US ($178,258,500 Cdn) is] locked up in these wallets. And so you can imagine it’s probably hundreds of thousands, if not millions of people, who are in my situation.

But I think they said it was 20 per cent of all the bitcoin accounts are owned by people who can’t access them [according to the cryptocurrency data firm Chainalysis].

Yeah, I think a good chunk of that, especially, like, some of the larger ones, were very early wallets. So, you know, at the time, it might have been less money.

In my case, it was $140,000 ($179,000 Cdn), which for me was a huge amount — like an incomprehensible amount, even then. But of course, you know, once you can’t access it and the price goes up, the number just gets bigger and bigger.