A German-born programmer Stefan Thomas holds an estimated $220 million in bitcoin in a digital wallet, but can't remember the password. He was gifted over 7,000 BTC back in 2011 and currently lives in San Francisco.
Thomas now risks locking them in the wallet forever thanks to an IronKey system that gives only ten attempts to break the encryption. Thomas has only two password attempts left before the system will shut down.
Thomas told New York Times that the experience has understandably put him off cryptocurrencies, “This whole idea of being your own bank – let me put it this way, do you make your own shoes?” he said. “The reason we have banks is that we don’t want to deal with all those things that banks do.”
He definitely has a point. Over $140 billion in market value is estimated to be locked in digital wallets, according to the New York Times. The German-born citizen has become one of the best hodlers in the world as he watches other people cash in their fortunes. His misfortunes shine light on the importance of safe ket storage. While defi advocates love to remind customers, "not your keys, not your coins," there are similar risks in holding keys yourself.
Bitcoin isn't controlled by any central authority or intermediary—it's just software and mathematics— so there is no backup to help customers gain access to their cryptocurrency. It's important to understand the different types of crypto wallets to help you decide the safest place to store your wallet keys. For more information on crypto storage options, click here.