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Top 5 Ways How to Lose a Key to Your Wallet

23.10.2017

Due to the growth of a bitcoin, the issue of safety of wallets is gaining popularity.

As you know, you can’t extract the crypto-currency from a wallet without a password because a 256-bit private key is almost impossible to crack. Lost bitcoins will be lost forever.

The total number of bitcoins in the world is limited. They are limited to 21 million. About 17 million have already been mined, but almost 30% of them are “dead weight” — the currency that will never be used in the future. At the moment, the total number of “dead” bitcoins is about 4.3 million, and their cost is about $14 billion at today’s price.

Key are lost constantly. Let’s look at the top most popular ways to lose your savings in the crypto-currency.

1. Throwing out a USB flash drive or hard drive.

One of the most common and annoying mistakes, which are made by the owners of wallets, is to lose intentionally or accidentally the carrier on which this wallet was kept on. The most famous cases appeared at the early stage of existence of digital currency, when bitcoin did not have a significant value.

James Howells, a 28-year-old IT specialist from Newport, is notorious in the crypto-world as a man who got rid of 7,500 BTC voluntarily. James was one of the first miners in the world, but then he abandoned his hobby because of the underestimation of the prospects of the crypto-currency. For three years he kept a hard disk with a wallet till a general cleaning, which he did in 2013. Attempts to dig a disk in a rubbish dump did not succeed.

David Kitchen, who is also a Briton, was just blear-sighted. He stopped mining due to the noise of the fan, and his 50 bitcoins, which were on the USB drive, were simply erased and replaced by a Linux distribution.

At present, hardly anyone will throw out a flash drive with bitcoins consciously, but no one is insured against the mechanical damage or accidental loss of a removable media.

2. Losing access to the password.

Owners of crypto-wallets are most afraid of password theft, so they are insured against it in every way, using most reliable methods. For example, Adam Leonard, who is a CEO of the BlockEx stock exchange, stored a number and password from a wallet with 6000 BTC on Hushmail (a secure email service). The service has established itself as a reliable one, but has let its user down. Adam lost the password for mail itself, and it was impossible to restore it. Today, Hushmail locked the amount of $ 28,780,000, which no one will ever be able to use.

Even the most reliable way of storing passwords can let people down and force them to abandon a fortune.

3. Losing a piece of paper with a password.

You can protect yourself from the unreliability of storing keys on digital media and services in an old-fashioned way — to write a password on paper. At first sight, it’s a simple and effective tool that won’t be cracked surely. But a paper carrier is even easier to lose than a digital password. Vladimir Tikhomirov, the founder of the IT company DDG, purchased bitcoins for 500 000 rubles in 2015. He left the piece paper with a printed password in a table drawer. When the bitcoin price reached $ 1000, the company moved to a new office and changed furniture. The password was irretrievably lost because of the change of furniture. Obviously, Vladimir’s desire to invest in the crypto-currency was gone for a long time.

4. Forgetting the wallet code.

Not all crypto-owners trust digital or physical storages. Many of them rely on their own memory. In terms of security, this is one of the most reliable ways to store keys, but its reliability is very low.

For example, Gideon Gibson Nweze, the founder of KickCity Company, once left his wallet in a taxi, charging the phone after the night walk. It would be possible to restore the wallet on another device, but only if the password was entered. However, Gideon never remembered the password. While he was creating a code, he decided to rely on his own memory, and it let him down at the most crucial moment.

Not a single owner of crypto-currency is insured against such situation because the memory is a tricky thing.

5. An accident.

Unfortunately, there is no insurance against the vicissitudes of fate as well. Even crypto-owners are mortal. As statistics show, 110 Bitcoin owners die every day, every 13 minutes a crypto-currency owner dies. And if none of his surroundings has access to the password, these savings will be unavailable forever and will turn into “dead bitcoins”. Unlike fiat funds, remaining funds in crypto-economy are not allocated anywhere and can’t be used by anyone.

Conclusion

Loss of your savings in bitcoins is easy enough even without attempts of hackers and fraudsters to crack them. Crypto-owners cope with this task themselves. First of all, such situations occur due to the fact that they do not know about a reliable way to protect their wallets. At the moment, the best known for protecting crypto-currency savings in case of loss of the access to the wallet — MyWish.

MyWish application was created by Russian developers using Ethereum smart contracts. MyWish is a mobile application and a website where every person can create his own smart contract and manage it without special knowledge in the field of IT. Thanks to these contracts, it is possible to provide the transfer of savings to other user wallets of relatives’ ones in case of the unforeseen events. The service works as follows: for example, if the wallet is not active for 3 years, the funds are transferred to the reserve wallet. Terms and conditions of such contracts are set individually. Thus, the loss of the wallet key will not equal the loss of funds.

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