Do You Have a Forgotten Bitcoin Fortune?

During the hype that accompanies a bull market, many people acquire their first cryptocurrency wallets. When the hype inevitably fades, their recollection of where they stored their crypto and how to access it can fade as well. Years later, they inevitably want to know how much their investments have grown. You can imagine the frustration when they can’t access their cryptocurrency. This is not an uncommon problem. A few early Bitcoin investors famously lost access to Bitcoin wallets worth millions. For example, in James Howells’ case, he lost 7,500 Bitcoin (worth about USD $300 million today). He still has not retrieved his Bitcoin.

Of course, there are other ways that you can lose your Bitcoin. In this article, you will learn about common ways that people lose their Bitcoin, how you can track down your own forgotten Bitcoin, and learn from those who have lost and recovered their own fortunes.

Bitcoin Lost and Bitcoin Found

The media seems to love stories of juicy Bitcoin wallets that became lost and are yet to be found. James Howell, as mentioned above, is still pleading with a local council to give him access to a garbage dump to search for his hard drive. Another early investor, Stefan Thomas, has 7,002 Bitcoin locked on a hard drive, which he lost the password for. His hard drive is an IronKey drive, which only gives him 10 guesses to unlock. After that, all his Bitcoins are lost forever. Today, Thomas has used 8 of his guesses.

What about those who, thankfully, recovered their lost Bitcoin fortunes? Remarkably, there is a lack of media coverage of such instances. Perhaps happy endings don’t pay well in the world of media. Regardless, rest assured that happy endings do happen. For those who can’t come up with their own solution, there are services that specialize in retrieving lost wallets. One such service is Wallet Recovery Services (WRS). WRS has an abundance of positive testimonials on their website. Whether they have actually unearthed any forgotten fortunes is unclear.

Where Did Your Bitcoin Go?

Does Bitcoin just go down the drain forever to be lost in the ocean of where all waste goes? Thankfully, your lost Bitcoin won’t pollute any oceans, but where did it end up? Well, that depends on how it was lost.

Did a friend or family member try to send you some Bitcoin? If you never received it, then they probably still have it. Bitcoin’s blockchain network is very sensitive to typos. Therefore, if the recipient address is invalid, then the transaction will not go through.

The only exception to this is if the typo matches another valid address. This is quite unlikely, but, if this did occur, then the transaction would have gone through. In this case, tracking down the address owner is a tall order. Wallet addresses do not provide owner identification details so methods above the scope of this article are needed. Even if you discover their identity, cross your fingers that they’ll give up your lost Bitcoin.

Do Not Lose Your Recovery Seed Phrase

I repeat, do not lose your recovery seed phrase.

Losing your seed phrase is close to the number one faux pas when it comes to cryptocurrency investing. In case you’re not aware, a seed phrase is a set of 12-24 words that are used as a secret passcode to access a cryptocurrency wallet.

Even if you have your cryptocurrency stored on a hard wallet, and you lose said hard wallet, then you can still recover your funds with your seed phrase. If you lose your seed phrase however, then you are at risk, no matter how you lost access. All hope is not yet lost, though. If you have a partial recollection of your wallet password or seed phrase, then WRS, mentioned above, can be of help. Their specialty software is designed to decrypt the remainder of partial passwords.

Proper Bitcoin Storage

There are two forms of cryptocurrency storage: cold wallets and hot wallets. The difference is that a hot wallet is connected to the internet while cold is not. As you can imagine, cold wallets are more secure. Hard (hardware) wallets are cold wallets.

One risky form of hot wallet storage, and a common source of lost funds, is on an account with an exchange. Exchanges are perpetually connected to the internet, making them susceptible to hackers. In 2019, there were 12 hacks to exchanges that resulted in a loss of almost USD $300 million. If this is how your Bitcoin was lost, then there’s a very low probability you will have your Bitcoin returned. This is because hackers will likely quickly convert stolen Bitcoin to cash. However, as with Cryptopia, it is not unheard of that an exchange will follow up to return at least some lost funds.

A Word to the Wise

In a nutshell, do whatever you can to not lose your Bitcoin in the first place.

As the idiom by Benjamin Franklin goes, “an ounce of prevention is worth a pound of cure”. If you have any faith in Bitcoin, then acknowledge that you’ll use it in the long-run, store your Bitcoin in a cold wallet, and store associated passwords and seed phrases securely.

If you lost track of your Bitcoin, then at least you’re not out of options. Old hard drives can be resilient to damage and services do exist to help recover partially forgotten passwords and seed phrases. Unfortunately, in some instances, the chances of recovering your lost Bitcoin is near zero. Best to mark some battles as lost and walk away grateful for lessons learned.

It is estimated that around 20% of all Bitcoin mined has been lost. Today, that represents roughly USD $200 billion in lost Bitcoin. I sincerely hope your Bitcoin has not contributed to this statistic. If it has however, I hope this article might just help you track down your forgotten Bitcoin fortune.