Wednesday, 20 Jan 2021

Bitcoin: Forgotten password costs Auckland man $50K

Auckland man Adrian Clarke might be New Zealand’s unluckiest cryptocurrency investor. A trio of cryptocurrency misfortunes have cost him somewhere north of $110,000.

Earlier this week, the New York Times reported that around one in five Bitcoin wallets, holding some $240 billion in fiat currency, are now inaccessible, mostly due to lost passwords (unlike a traditional bank, a crypto exchange can’t help you if you forget your logon).

One hapless punter, San Francisco programmer Stefan Thomas – who bought a stash of Bitcoins 10 years ago for $2 to $6 each – has two guesses left to figure out a password that, as of this week, will unlock an account worth around US$220 million. If he fails, his account will be encrypted and inaccessible forever.

Clarke – a senior engineer with one of our big three phone companies – isn’t in the same league. But speaking to the Herald from the Ellerslie Novotel, where he’s sitting in managed isolation following a trip to the UK, he outlined what is nonetheless a poor streak of luck.

His adventures in Bitcoin started in 2014, when he bought a handful of coins via Japan-based Mt Gox – at the time, the world’s largest Bitcoin exchange.

“You could buy a beer at the Dog’s Bollix [a central Auckland pub] with Bitcoin. It was all a bit of a lark,” he says.

But the same year, Mt Gox went bust after the theft of some 744,000 Bitcoins (the Japanese exchange’s demise also hit headlines here, given it held around $43m in frozen accounts related to New Zealand-registered Bitcoinica, which gained the ignominy of becoming one of the first crypto-exchanges to fall over in 2012 after hackers stole just under 19,000 coins and deleted users’ customer records and balances).

Clarke was philosophical. His couple of coins in Mt Gox were worth around $700. A bummer, but not a major. (Incidentally, Clark says he’s still getting update letters from Mt Gox’s liquidators today, some seven years on – not encouraging news for those who are waiting on news of tens of millions lost with the collapse of Christchurch-based exchange Cryptopia in January 2019, which a Grant Thornton crew is still trying to untangle.)

The telco engineer still had one Bitcoin on a USB key.

But alas, that was lost too as he forgot the password and, at some point, lost the thumb drive.

At the time, the loss of the coin seemed no big deal.

But over the past few years – bar some swoons – the value of the digital currency has climbed.

Over the past month, it doubled in value. Even allowing for a dip this week, Clarke’s single Bitcoin is worth some $52,000.

But wait, there’s more.

Around 2015, Clarke roped in some friends for a project that would have seen them “mine” or create 20 to 30 bitcoins after gaining access to some ASICs (Application-Specific Integrated Circuit chips) used for the ultra-intensive computing process involved. But they ultimately abandoned the project, calculating that it would generate higher power bills than the coins would have been worth at their 2015 value (which was in the $400 to $650 range).

But given the way Bitcoin’s value took off over the next few years, he could have cleared a profit of at least $60,000 from the mining venture, Clarke says.

Does the loss of this Bitcoin on the thumb drive or the never-was mining project play on his mind?

Read More

  • $30m Cryptopia heist: Liquidators likely heading back to court

After all, he first came on the Herald’s radar after tweeting that while his losses weren’t in Thomas’s league, he could have a new kitchen and bathroom today if it hadn’t been for that forgotten password.

“No,” Clarke says. “S*** happens. If you’ve never had something, you don’t miss it.”

3 things you need to know about cryptocurrencies like Bitcoin

• They’re high risk and highly volatile – the price can go up and down very quickly
• They’re not regulated in New Zealand
• Cryptocurrencies, crypto-exchanges and the people that use them are often the targets of hacking, online fraud and scams

Source / FMA

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