Gogagah.com | Is forgetting the password to your digital wallet easy to resolve? | Those who have invested in Bitcoin are now probably quite happy with their decision. If you take a look at the price of this rather volatile cryptocurrency now and compare it with the one from just a few month ago, you’ll notice that your investments might have made you quite richer. Also, people are starting to trust this cryptocurrency more and everything seems to be coming up roses. Still, just like you can lose your traditional currencies when you lose your credit card or your wallet, you can lose your digital wealth if you can’t remember the password to your digital wallet.
Everyone has probably heard the story about a programmer with only two guesses remaining to figure out a password that is currently worth about $220 million. Namely, the password will let him unlock a small hard drive, known as an IronKey, which contains the private keys to a digital wallet that holds 7,002 Bitcoin. Unfortunately, he lost the paper where he wrote down the password for his IronKey and he is allowed only 10 guesses before it seizes up and encrypts its contents forever. His first eight attempt have been unsuccessful.
Is this the only case?
As you might have guessed, it’s not. In fact, you’d be surprised to learn that many people are locked out of their Bitcoin fortunes simply because they’ve lost or forgotten their keys. What this means is that they can’t cash in on their digital wealth. As a matter of fact, it’s estimated that of the existing 18.5 million Bitcoin, around 20 percent, currently worth $140 billion, are in lost or stranded wallets. Companies that help users find lost digital keys are receiving dozens of request a day from people who wanted help recovering their riches, three times the number of a month ago.
What is happening to those people?
Just imagine the frustration of those locked out of their wallets, especially those who have owned the coins since the cryptocurrency’s early days a decade ago, when only few had confidence that the tokens would be worth anything. Having invested a significant amount of time and money in profitable Bitcoin mining, they are now investing hundreds of hours trying to get back into their wallets. Needless to say, many have already lost fortunes because they were unable to retrieve their passwords.
What makes Bitcoin special?
Bitcoin uses unusual technological underpinnings, which set it apart from normal money and give it some of its most vaunted (and riskiest) qualities. Traditional bank accounts and online wallets, such as Wells Fargo, and other financial companies, such as PayPal, feature an option for people to reset lost passwords. However, Bitcoin has no company to provide or store passwords, since the idea was to allow anyone in the world to create a digital bank account and hold the money in a way that no government can regulate. Namely, Bitcoin is governed by a network of computers that agreed to follow software containing all the rules for the cryptocurrency. The software includes a complex algorithm that makes it possible to create an address and associated private key, which is known only by the person who created the wallet.
What the software also does is enable the Bitcoin network to confirm the accuracy of the password to allow transactions, without seeing or knowing the password itself. Basically, the system allows anyone to create a Bitcoin wallet, without having to register with a financial institution or go through any kind of identity check.
What about the unfortunate programmer?
A decade ago, the programmer from the beginning of our story received 7,002 Bitcoin by an early Bitcoin fanatic as a reward for making an animated video, which introduced many people to the technology. He lost the digital keys to the wallet holding the Bitcoin the same year. At first, he might have thought he would never be able to cash in on his asset, but the situation has changed dramatically since then. Naturally, he is now devastated and claims that people shouldn’t be their own banks and hold their own money. He has put the IronKey in a secure facility in case cryptographers come up with new ways of cracking complex passwords. Keeping it far away helps him try not to think about it, he said. And that’s all he can do in an attempt to preserve his mental health.
In a nutshell, if you want to use your cryptocurrency, you mustn’t forget or lose your password to your digital wallet and make it as secure as possible. Otherwise, you’ll be unable to cash in on your investment and you’ll feel extremely frustrated, which is definitely something you want to avoid.Dan Radak is a marketing professional with twelve years of experience. He is currently working with a number of companies in the field of digital marketing, closely collaborating with a couple of e-commerce companies. He is also a coauthor on several technology websites and regular contributor to Technivorz.