Bitcoin: How a forgotten password could cost one man £175 million

Bitcoin stock image
A man has two guesses left before bitcoin worth millions of pounds is lost forever. Credit: Unsplash

By Digital Presenter and Producer Mojo Abidi

We’re all guilty of forgetting our password from time to time but for one man, the stakes are higher than most.

Programmer Stefan Thomas's lost password will let him unlock a hard drive containing £175m ($240m) worth of bitcoin.

But after eight wrong guesses, he has only two attempts left before the money is lost forever.

His predicament has gone viral.

Speaking to The New York Times, Thomas revealed that he was gifted 7,002 bitcoins in 2011, when they were only worth a few dollars each.

The cryptocurrency has fluctuated in value over the years before surging in recent months. One bitcoin is currently worth £24,900 ($34,000).

Thomas wrote down the password on a piece of paper which he lost.

After 10 failed attempts, the password will encrypt itself, making the bitcoin impossible to access.

Ex-Facebook security head Alex Stamos has offered to help him for a 10% cut.

Bitcoin has fluctuated in value over the years. Credit: Unsplash

Unsurprisingly, the dilemma has put Thomas off cryptocurrencies.

He told The New York Times: "I would just lay in bed and think about it. Then I would go to the computer with some new strategy, and it wouldn’t work, and I would be desperate again.

"This whole idea of being your own bank — let me put it this way: Do you make your own shoes?

"The reason we have banks is that we don’t want to deal with all those things that banks do."

On Twitter, people have been expressing their anxiety over Thomas's plight.

"My God. That's stressing me out and I don't even have a stake in this,” one person tweeted.

Others suggested he try entering "password" or "1234".

Thomas is not the first potential bitcoin millionaire to be locked out of their fortune.

Around £100 billion pounds worth of bitcoin is lost in wallets that cannot be accessed, according to cryptocurrency-data company Chainanalysis.

Around £100 billion pounds worth of bitcoin is thought to be lost in wallets. Credit: Unsplash

An entrepreneur from Barbados lost 800 bitcoins after a colleague reformatted a laptop containing the private keys to his wallet.

And in 2013, an IT worker from Wales desperately searched a landfill after throwing away a hard drive containing 7,500 bitcoins.

At the time it was worth more than £4m. It would now be valued at more than £250m.

Is is worth investing in bitcoin?

Seeing figures in the millions might make you tempted to invest in the cryptocurrency.

But it is incredibly volatile, warns Jeremy Cheah, Associate Professor of Crypto-Finance at Nottingham Business School.

"Cryptocurrency, like bitcoin, fluctuates massively within days, hours or even minutes. So you have to be willing to take that risk," he says.

"One moment you can be a millionaire or even a billionaire, but the next you could be completely wiped out."

Professor Cheah says a lack of supply and an increase in demand has caused the recent spike in bitcoin.

He thinks it could continue to rise but says the cryptocurrency's behaviour can be unpredictable.

"Bitcoin is a popular investment, but if you have money locked in a wallet and you forget the password, it is useless.

"The value will grow and fall, but you'll never have access to it."

He suggests keeping your passwords somewhere safer than a scrap of paper.