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Vitalik Buterin, co-founder of Ethereum, recently highlighted a lesser-discussed issue in cryptocurrency security

Martin Freiberger, February 28, 2025

Vitalik Buterin, co-founder of Ethereum, recently highlighted a lesser-discussed issue in cryptocurrency security: while theft often grabs headlines, many lose substantial sums of crypto through negligence or mishaps. In a post on X, Buterin stressed that wallet solutions need to tackle not just hacking but all forms of loss, including forgotten passwords, software glitches, or misplaced devices.


Buterin’s comments shift focus from high-profile thefts—like the $1.5 billion stolen from Bybit (later offset by the exchange through loans, whale deposits, and Ether buys)—to the quieter problem of crypto vanishing due to user error. He listed examples: a software bug, a lost device, a paper wallet destroyed in a fire, or a device upgrade without a backup. These incidents, he argued, deserve more attention in security discussions.


A striking real-world case is James Howells, who lost 8,000 Bitcoin—now worth hundreds of millions of pounds—when his ex-partner accidentally threw out his hard drive in 2013. Likely buried in a Newport City Council landfill, the device remains out of reach despite legal efforts. With the landfill set to close within two years, Howells is considering an appeal or buying the site with investor backing. “This is my full-time fight—I won’t rest until I reclaim my £620m in Bitcoin,” he said.


Howells’ ordeal is extreme but not isolated. A 2020 Chainalysis report estimated that about 20% of mined Bitcoin at the time was “lost,” locked in dormant wallets, with no updated figures widely available. Such losses often stem from carelessness or accidents, underscoring a widespread issue.


Recovery, though rare, can happen. Stefan Thomas, locked out of his IronKey drive holding 7,002 BTC for 11 years due to a forgotten password, regained access with help from hacker Joe Grand and researcher Bruno Requião da Cunha. Their innovative method cracked the password by dissecting the software that created it.


Still, success stories are exceptions. Buterin’s point is clear: the crypto industry must prioritize not only theft prevention but also user-friendly recovery options for losses tied to human error or misfortune.

Martin Freiberger, February 28, 2025
Source: Crypto news

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