Bitcoin wallets comprise of passphrases meant to enhance the security of the owner’s investments. Now, what happens when the owner forgets the passphrase? One bitcoin investor has purportedly lost access to funds exceeding $12.9 million. He lost his possession after failing to record the passphrase for his wallet.
In what seems like the latest timely lesson for the general bitcoin user base, Reddit account u/lumanubrecon alleged that as of November 26, their balance of 1,800 BTC was inaccessible.
Brain Wallet Challenges
The user explained that the tokens were originally stored in a “brain wallet” in 2016. When trying to recover the wallet using the passphrase generated back then, the user discovered that the wallet does not unlock. Could this be a memory lapse that made the user forget what passphrase they used?
A brain wallet is described as a form of Bitcoin wallet that generally features no physical or digital record of its passphrase at all. On the contrary, users set up a passphrase that is easy to remember but difficult to crack. An example of a passphrase is a simple sentence that swaps out standard letters for symbols that resemble these letters.
U/lumanubrecon went ahead to explain in an accompanying post:
“Besides memorizing the passphrase I also wrote it down in a book. Then now when I keyed in the passphrase it doesn’t generate the address where I’ve sent 1800 BTC to.”
Is it Fact or Fiction?
After a thorough analysis of the loss claims, many questions come up. According to Bitinfocharts monitoring resource, just two wallets with an original balance of almost 1,800 BTC appeared in 2016. Both of these wallets saw subsequent inbound transactions with 1,000 BTC ($7.16 million) leaving one of them in 2017.
One Reddit moderator subsequently marked the post as “likely fake.” On the other hand, the moderator of the r/Bitcoin subreddit, BashCo, targeted brain wallets as a means of Bitcoin storage. He tweeted:
“Why is it called a ‘brain’ wallet when anyone with an actual brain would never do something so stupid? The story is so dumb I assume it is not real.”
Irrespective of the complaint’s credibility, nonetheless, the need to protect private keys to crypto balances is gaining more attention in 2019. According to earlier reports, there is a dedicated drive to prompt users to take control of their holdings. That drive is scheduled to hold its second annual event on January 3, 2021.
Going by the name Proof of Keys, this event demands any crypto owner controls their private keys. Meanwhile, on November 25, new findings from the Binance exchange showed that most of the institutional investors using its services, totaling almost 92%, had no control of their private keys.
This allegation by one Redditor, whether real or fake, serves as a wake-up call for all crypto wallet holders to remain careful. It is advisable for everyone who has a digital wallet to always have full control of their private keys and ‘passphrases’ where applicable to ensure that they do not lose their possession to hackers or their failing memory.