Two heart breaking stories about bitcoin security we can learn from

[Cricktor]

Some here are talking of importance of backup(s) of mnemonic recovery phrases of wallets (the recovery words, most commonly of BIP-39 type but there were also few other mnemonic backup schemes in the "old days"). That's undeniably true for such wallets that use such mnemonic words backup.

That very likely doesn't apply to James Howells' wallet because when he mined his coins (according to the linked Wikipedia article), he used the standard client by Satoshi, IIRC named Bitcoin-GUI, which used a pool of unrelated and random private keys. Deterministic wallets (BIP-32 and later BIP-39) were invented later.

James Howells' main fault, whatever is true of his story, is that he didn't have multiple redundant copies of his wallet file on multiple storage devices. Period!

When he mined his coins, they weren't worth much (assuming 2009 or even 2010). But he mined his coins and kept his harddrive for a reason. In the weeks or months before he "lost" his harddrive, his coins were worth somewhere in the ballpark of half a million pounds.

Now, tell me, why would someone sane not have multiple redundant copies of a wallet worth such an amount? It's absurd and insane to rely on just one (fragile mechanical) storage device which apparently wasn't even stored properly respecting the value of it. This is dumb beyond measure.


Regarding the IronKey drama of Stefan Thomas, I can only say, do not try to rely on your wet brain memory. Human memory is fragile and you will forget stuff you don't recall or use regularly, especially when your secret is made up in a way that's not straightforward for you to remember. But even if it is, there's a risk to forget something important and that's the moment you're screwed.

I have personal experience to have lost the additional mnemonic passphrase of an Electrum wallet which I didn't document verbatim. I had quite some hints written down which I thought should be more than enough to reconstruct it when I need it for recovery. I failed badly when I tried to verify recovery weeks or months later. Fortunately no coins were lost, because I had the wallet encryption passphrase and could still transfer all coins off of it.

That recovery failure taught me a valuable lesson. Needless to say, that I document since then everything necessary and I verify recoverability basically before I put funds in a created wallet. Because loosing coins because you don't have a working backup is avoidable and probably one of the worst things for a bitcoiner.

It's also risky to rely seemingly on just one full encrypting device which could fail for whatever reasons. Shit just happens, that's Murphy's law. If you don't have at least one backup device you're screwed immediately when your single device malfunctions or you can't remember the decryption sequence and have a very limited number of tries and you already exhausted the majority of them.

Don't be like James Howells or Stefan Thomas, be smarter. You and your coins deserve it.

[Swordsoffreedom]

What James Howells was doing he didn't think was wrong at the time because Bitcoin wasn't very expensive at the time. So maybe he threw the hard drive in the trash without a second thought. But as the price of Bitcoin rose he began to regret that despite year of desperate effort and legal battle he could not recover it. In fact once the private key are lost it is all over, there is no bank or customer care to rescue you XD

And Stephen Thomas's story is even more heartbreaking, lol! Only few attempt of the password are left after which it will be locked forever. Think a strict wallet for security might be fine but losing access can be your undoing. So it is not just about collecting coin but managing backup and password is also a real deal ^^

[Judith87403]

Stories such like James Howells and Stefan Thomas show a major truth about Bitcoin: self custody provides freedom, yet it equally requires responsibility. The upside may be a life changing one, but one little error could be irreversible.

The real lesson isn't only hold long term, but to secure properly. Backups, redundancy, and clear organization really matters as well as conviction. Bitcoin do not forgive any form of carelessness.

At the same time, regret may be even more destroying than loss. Markets move, opportunities do come and go, yet mental stability and perspective does matter much more than all asset. Learn from the examples,  grow you habits of security, and focus just on that which you can control moving forward.

[Olotu20]

It's always said that, we should learn from the mistakes of those who has gone ahead of us and use it as a lesson in our journey of life. Coming to our crypto accumulation journey it's important that we learn from stories like this and should threat the security of our crypto assets with all level caution protecting our Bitcoin should be our first priority because, you may end up losing it due to carelessness or even to scammers. We should make sure that we store our seed phrases securely in any way that you intend to store it make sure that it's always protected securely and keep it in a place that should not be easily disposed in case when written down on a piece of paper.

[Z-tight]

What James Howells was doing he didn't think was wrong at the time because Bitcoin wasn't very expensive at the time.

If you surf the internet, the result is that James Howells lost his 8000 BTC's in the summer of 2013, so even at that time, the amount lost was still very expensive. Apparently, Howells' coins were worth ~ $4 million, everyone would agree that it is a huge amount of money. Surely you cannot compare it to todays value, but it was a great amount even at the time.

So maybe he threw the hard drive in the trash without a second thought.

No, he couldn't have. The story is that his wife, or maybe girlfriend put the hard drive in the trash, without knowing what it contained and that was how it was lost. It's not like he wanted to throw it away because apparently BTC was not worth much.

[IjawMan]

What James Howells was doing he didn't think was wrong at the time because Bitcoin wasn't very expensive at the time.

If you surf the internet, the result is that James Howells lost his 8000 BTC's in the summer of 2013, so even at that time, the amount lost was still very expensive. Apparently, Howells' coins were worth ~ $4 million, everyone would agree that it is a huge amount of money. Surely you cannot compare it to todays value, but it was a great amount even at the time.

It apparently worth a large value of dollars cause $4 million in 2013 can buy you a property that $10 million of present day can not afford to get you as a result of the high inflation of prices of products and services today. There could be no other better simplest way to attribute what may have led to the loss of the drive than carelessness.

So maybe he threw the hard drive in the trash without a second thought.

No, he couldn't have. The story is that his wife, or maybe girlfriend put the hard drive in the trash, without knowing what it contained and that was how it was lost. It's not like he wanted to throw it away because apparently BTC was not worth much.

The wife or girlfriend must be a nonchalant person to not wait to ask your man if a harddrive you found in the house may belong to him and/or may be stored with important data or file. She be living in regret each time she remembers her mistake and with what bitcoin price is presently.

[Leokingsley2477]

Heartbreaking losses. Guess we're reminded of the importance of secure storage and backups.

[Rustam Meraj]

These events show fake shortage of market, where number of lost BTC is guessed at 3.7 million, which is worse than threat of hackers in world of holding your own money.
To my mind, being your own bank is powerful freedom and needs no-excuse way of thinking and, as these engineers found out, piece of paper lost or lost hard drive can be life changing wealth that will never come back in cold, no-feeling world of blockchain.

[btc78]

let’s not wait until we are the ones people use as an example. these people have accumulated lots of bitcoin for it to disappear. by the time you have accumulated that much, make sure you are knowledgeable enough about wallet security and the such

[yhiaali3]

~snip~

it's true we are humans and are with weaknesses and shortcomings and sometimes laziness as well, but in this particular case of bitcoin with those persons that got it in its early age, it isn't as a result of any of these human limitations but for what I agree with the first users comment (a lack of vision) which talk about how some persons saw bitcoin as an experiment rather than real life assets that could make value in the future. This the carelessness with handling and safekeeping of seed phrases.

Let's take today for instance how many people or stories of people do we hear about them losing their wallet seed phrase containing bitcoins worth thousands to millions of dollars?! It's scarcely heard of, except for an attack.  It's because there's value now with the digital asset, almost everyone with large BTC is now consciously security conscious.

I agree with you; it's true there's a difference between the thinking of early Bitcoin investors and today's investors, who now view Bitcoin as a valuable asset that must be protected at all costs, whereas this wasn't as important before, leading to neglect.

But my point is that sometimes unforeseen events can occur, such as a house fire, an accident that destroys the location where you store your seed, or its loss in other ways, like being robbed or attacked, and so on.

[davis196]

I'm sure that these stories have been shared on the forum for around a hundred times. OP, there are better ways to add value to the forum and to boost your post count. Keeping your passwords and private keys in a safe place is the foundation of being a good Bitcoiner. It's the same as keeping a big pile of gold somewhere in your house or your backyard. There's always a risk of losing everything, due to theft or some unexpected circumstances like natural disasters(floods, earthquakes, etc.) or your house/apartment getting burned to the ground by fire.
Maybe getting an insurance policy would cover some of those risks, but no insurance company is going to compensate you for forgetting your password and private keys of your cold wallet.

[Die_empty]

Donneski made some great points about hindsight but what I am trying to understand is how James
Howells was not more vigilant of what that HD contained. I mean 8000 Bitcoin in 2013 was still worth
over $100,000!

If the value of his Bitcoins is more than $100,000, it shows carelessness. According to the story h e mistook the HD for a broken one. Why would an HD with such an amount be kept together with broken ones? Maybe it was an honest mistake. He did his best to recover it, but all was fruitless.

How many people have the luxury of three different SAFE locations to store their seed phrase? Few to none. I am for making more than one copy of your seed words, but i also understand that it is not practical for a lot of people, for the lack of multiple safe locations.

Most people have just one house, making it impossible to keep their seed phrase in more than one location. It's still good to make multiple copies and keep them in different safe locations in your house. You might have easy access to a copy in case of an incident like a fire outbreak, flood, or other uncertainties.