Lost Passwords Can Cost You a Bitcoin Fortune

Posted by
Jan 19, 2021
Reviewed by
Jan 16, 2024
min. read
Table of Contents

Imagine storing the password to your online-only bank account on an encrypted portable hard drive that required a password to access. Then imagine that you forgot the password to the hard drive. Okay, not a great situation to be in, but not an impossible one. Unless your bank has a policy of not allowing account holders to reset forgotten passwords.

Let’s complicate things further. Just before you forgot the password, you deposited lottery winnings of $260 million. Now the fortune you’ve always dreamed of having is sealed permanently in an encrypted hard drive. You have no idea what the password is and no way of acquiring it. You’ve made a few guesses, but your drive will eventually lock permanently after a fixed number of incorrect entries.

Sounds far-fetched, right? Nobody would be so irresponsible or forgetful with so much money at stake. They would have the password written down and stored in multiple places. Such a large fortune would never be lost forever. Well, a recent New York Times article about cryptocurrency millionaires suggests that this outlandish scenario is more common than you might expect.

Cryptocurrency Has Few Safeguards

A German-born software programmer interviewed for the New York Times story is living through just such a nightmare. Years back, he stored the private key to a digital wallet containing 7,002 Bitcoin on a small IronKey USB drive. In the intervening years, he lost the paper on which he wrote the IronKey password. That 7,002 Bitcoin is now worth about $260 million as of this week.

Kingston Technologies, which makes the IronKey USB drive, said in a follow-up report there was nothing it could do to help. Each drive allows only ten password attempts before the encryption key is erased and the data becomes permanently inaccessible. The programmer has made eight incorrect attempts. He has two left.

The inability to access Bitcoin or other cryptocurrency funds is a common problem. Digital currencies have no safety mechanisms and are decentralized by design. This is a large part of what attracts people to them. The New York Times report said that of the 18.5 million Bitcoin that currently exist, about 20 percent—about $140 billion in value—is lost or similarly stranded in digital wallets.

Safer Hardware Options for Digital Wallets

Cryptocurrency owners don’t have to sacrifice security for accessibility. SecureData knows how important it is to keep your private key safe. We also know that accidents happen and passwords get lost. Our award-winning hardware and software solutions will keep your digital currency secure while never putting it at risk of permanent loss.

SecureDrive® KP and SecureUSB® KP devices are FIPS-validated and hardware-encrypted for the highest level of security. Users authenticate these drives via an alphanumeric keypad and a password of 7 to 15 digits. They work with any operating system and on any device that has a USB port. If you add a USBtoCloud® backup license, you will never need to worry about lost passwords. Drive contents automatically back up to the Cloud service of your choice.

Our SecureDrive® BT and SecureUSB® BT devices feature the same FIPS validation and hardware encryption. But users access the drives via a secure wireless mobile app that offers multi-factor authentication. The app also gives users the option of retrieving a forgotten password safely and securely.

For added levels of security and accessibility, you can add our Remote Management (RM) License, which is compatible with all SecureDrive® BT and SecureUSB® BT devices. The RM solution’s geo- and time-fencing tools give you complete control over where and when your BT device can be accessed.

In the event of loss or theft, your password can be remotely reset through the web console to prevent unauthorized access. And if you happen to have a fortune in Bitcoin tucked away on a BT device and can’t remember your password, you can use the RM solution’s secure Admin Remote Unlock or Change Drive Password features.

If you own cryptocurrency or are interested in acquiring it, don’t trust such a potentially valuable asset to just any storage drive. SecureDrive® and SecureUSB® devices give you a total solution to data security and accessibility. They keep unauthorized users out without fear of permanently separating you from your digital assets.

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Philip Bader

After more than a decade in Southeast Asia as a reporter and editor for magazines, newspapers, and online media organizations, Philip Bader now serves as a freelance content writer for Secure Data Recovery Services. He writes blogs and web content about data storage technology, trends in enterprise data recovery, and emerging data storage technology.

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