This is not the first time we are seeing reports of this nature, and past experience tells us that there is no way for these people to access their wallets again. However, as the total value of these inaccessible assets reaches $140 billion, cries for change are once again being heard around the world.
Bitcoin is lauded by many due to its decentralised nature, but this may be precisely the reason why there is little hope of recovery. With a regular bank account, users are guarded by state regulation and can usually appeal if they lose access. However, the methods to secure bitcoin are different from regular accounts and states currently have no way to regulate these security measures.
Bitcoin owners are given private keys when they open their accounts with certain crypto exchanges, receive bitcoins in payment or mine their own coins. These keys give them access to their tokens and exist as complex strings of data, which are often stored in protected digital wallets. These wallets are then typically protected with passwords or other authentication measures. While this allows users to keep their bitcoin safe, it also creates an unsolvable problem for them if they forget their passwords. Some exchanges like Coinbase have emergency recovery measures that help people regain access to their wallets, but in most cases, bitcoin owners are locked out of their accounts indefinitely.
Approximately 20% of the 18.5 million bitcoins in existence are estimated trapped in inaccessible wallets, The New York Times reported on Tuesday, citing data from Chainalysis. That translates into $140 billion in today’s market. While these bitcoins are likely to remain in the world’s supply, they are kept out of circulation till users regain access to their wallets, if they ever do. Hence, while these coins aren’t being used, their inaccessibility does not impact the value of the cryptocurrency.
The bitcoin community is now split between people who want to keep the cryptocurrency’s rigid security measures and those who are willing to trade some of its decentralisation for greater safeguards.
The KPK government recently launched two state-owned mining farms, and officials will do well to remember the passwords to their wallets for once they are lost, there is little hope of recovery.