$4.2B of lost Bitcoin due to forgotten crypto wallet passwords can still be recovered
Cryptocurrency data firm Chainalysis estimates that 20 percent of the existing 18.5 million Bitcoin or around 3.7 million BTCs appear to be lost due to forgotten passwords.
Wed, 08 Sep 2021, 07:34 am UTC
While multi-million dollar crypto heists usually make it to the headlines, one of the most common but unreported causes of crypto losses is due to owners forgetting the passwords to their digital wallets. However, a father and son team believes that more than $4 billion of lost Bitcoin due to locked wallets can still be recovered.
A recent study by Cryptovantage revealed that 39.7 percent of crypto owners had previously forgotten the keys to their wallets. Fortunately, 95.6 percent were able to regain access to their digital currency holdings after being locked out.
Cryptocurrency data firm Chainalysis estimates that 20 percent of the existing 18.5 million Bitcoin or around 3.7 million BTCs appear to be lost due to forgotten passwords, the New York Times reported. Based on the crypto’s current price of $45,380.60, that means that around $168 billion in Bitcoin are inaccessible due to locked wallets.
However, there is still hope for owners who can’t access their Bitcoin holdings due to forgotten passwords. According to Chris and Charlie Brooks, the father and son team who runs Crypto Asset Recovery, 14 percent of locked wallets are potentially recoverable cases, Business Insider reported.
The duo concluded that between 68,110 and 92,855 lost Bitcoins are recoverable. Based on the crypto’s current price, that means that crypto owners can still gain access to between $3.9 and $4.2 billion in Bitcoin based on its current price.
Figuring out how their clients’ minds work is the key to finding lost passwords to their crypto wallets, according to the Brookses. “We get as good a list of passwords as we can from a client and then we put our heads together and spend some time extrapolating the way that they make their passwords and try to get in their mind when they are actually creating a password,” Charlie Brooks explained. “That's the most helpful thing, just seeing their practice. That's the cornerstone of our business, essentially.”
Chris Brooks explained that some of their clients are from countries where people are unbanked. “They may have a wallet with a couple of hundreds of dollars in it and that is their life savings. If they lose the password to it, they have no access to it anymore,” he said. “In some sense, it can be a heartbreaking piece of the business … we do crack some of [the wallets]. It's a balancing act to be helpful without going too far down a rabbit hole.”
They charge 20 percent of the recovered cryptocurrencies as commission. However, they don’t charge their clients if they can’t recover their wallets’ passwords.
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