After Matthew Mellon, scion of the Mellon banking fortune, died on April 16 of a drug-related heart attack in Mexico, his family was unable to locate the pass code needed to retrieve his fortune — said to have been worth as much as $1 billion — in XRP cryptocurrency, according to the Daily Mail.
Losing passwords is the kind of nightmare that haunts bitcoin investors. In fact, there are an estimated 3 million bitcoins — totaling nearly $25 billion — lost because the retrieval codes have gone missing or the currency owners died without passing the codes onto their next of kin.
Just ask James Howells — who lost a hard drive with the key to more than $60 million in bitcoin.
“I mined more than 7,500 coins over one week’s time in 2009; there were just six of us doing it at the time, and it was like the early days of a gold rush,” said the IT worker turned crypto investor, 32, who lives in Newport, Wales.
“Four years later, I had two hard drives in a desk drawer. One was empty and the other contained my bitcoin private keys,” Howells recalled. “I meant to throw away the empty drive — and I accidentally threw away the one with the bitcoin information.”
In 2008, bitcoin’s alleged creator Satoshi Nakamoto published an open-source code through which bitcoins are “mined” by solving complex calculations, embedded throughout the Internet, via extremely powerful computers. There is a finite number of 21 million bitcoins.
Part of cryptocurrency’s appeal is that it’s anonymous, untraceable and can only be retrieved by the person with the private key. Randomly generated by the Bitcoin algorithm, these can be more than 50 characters long — not exactly something you can memorize.
“People put them on laptops, storage drives, USBs,” said Brian Stoeckert, a legal consultant in the crypto field. “Lose one of them without having it backed up, and you are out of luck.”