One mistake and bitcoin millions gone forever
Has the digital revolution gone too far? A forgotten password. A discarded hard drive. And two men desperate to recover huge fortunes. Is this a terrible morality tale for a virtual age?
Newport city landfill is not an inviting place.
Every day, convoys of lorries arrive from all over South Wales, each one dumping tonnes of putrid waste onto an ever-growing mountain of rubbish. There are few people who would choose to spend much time there.
But for years, James Howells has been begging Newport Council to let him do just that. In 2013, the IT worker accidentally threw away a hard drive containing 7,500 bitcoin – then valued at £4.6 m. It was a mistake that has haunted him ever since.
In the eight years since Howells lost his hard drive, the value of the cryptocurrency has soared. Today, with his bitcoin worth an astonishing £210 m, Howells has renewed his plea: if the city lets him search the site, he will donate 25% of his fortune to create a Covid-19 relief fund.
Still, the council is clear: the answer is no.
More than 5,000 miles away in California, Stefan Thomas is also a bitcoin millionaire. He has only one problem: he cannot remember the password to his digital wallet.
Thomas’s options are running out: if he makes just two more wrong guesses, the file will seize up and he will lose his £175 m fortune forever.
But Howells and Thomas are not alone. Astonishingly, around 20% of the world’s bitcoin – worth an incredible £102 bn – appears to be locked in lost or stranded digital wallets.
Bitcoin was invented in 2008 by the elusive mastermind Satoshi Nakamoto and is part of a digital revolution.
For centuries, humans relied on exchanging early forms of currency such as cowrie shells to buy and sell goods. Then, in 600BC, King Alyattes of Lydia minted the first official coin.
Now, money is mainly an online affair – 92% of the world’s currency is digital. Covid-19 has accelerated this trend: the use of cash machines in the UK plummeted by 60% in April 2020.
But the digital revolution is not limited to money alone. Today, most of us spend our lives online – uploading photos to Instagram, attending meetings on Zoom or speaking to friends on WhatsApp.
This shift from the physical to the digital world has prompted one tech titan to issue a stark warning about “the lost century”.
“When you think about the quantity of documentation from our daily lives that is captured in digital form, like our interactions by email, people’s Tweets, and all of the World Wide Web,” Vint Cerf said in 2015, “it’s clear that we stand to lose an awful lot of our history.”
His fears are not unfounded. For years, millions recorded their lives online on a blogging platform called Journalspace, but they lost everything when a disgruntled employee wiped the database in 2009.
Now, some tech opt-outs are choosing to turn back the clock and reconnect with the real world. Sales of pre-digital equipment, from instant cameras to record players, are soaring.
They say they are saving the environment too: bitcoin mining alone uses over seven gigawatts of energy, the equivalent of seven nuclear power plants.
So, has the digital revolution gone too far?
Yes, say some. The bitcoin millionaires cut off from their online fortunes are prime examples of the downfalls of the digital age. As we spend more time online, humanity is at risk of becoming dangerously disconnected from the physical world. The digital era is bad for society, mental health and even the planet. It is no surprise that some are now choosing to turn their smartphones off for good.
It is not that simple, say others. The digital revolution has done more to improve our lives than any other invention in history. It represents convenience, choice and personal freedoms. It is easy to be nostalgic for a simpler time, but few would argue that life during the pandemic would be better without online communication. We should be embracing the digital world, not dismissing it.
- Do people today spend too much time online?
- Should money be regulated by governments?
- Design your own digital or cryptocurrency. Think of a name for your currency and draw a picture of its logo.
- Imagine the coronavirus pandemic had taken place in 1980, not 2020. How would lockdowns have been different without the digital technologies we have today? Write a list of five key differences, with explanations. Then compare your list with your classmates.
Some People Say...
“The digital revolution is far more significant than the invention of writing or even of printing.”Douglas Engelbart (1925 - 2013), American engineer and early Internet pioneer
What do you think?
Q & A
- What do we know?
- It is generally agreed that people today spend more of their waking hours using digital technology than ever before, so much so that big tech companies like Apple, Google, Facebook and Instagram have all unveiled features to stop people mindlessly scrolling through the apps on their phones. So far, these “digital detox” strategies appear not to be working - in 2019, American adults spent 3 hours and 30 minutes every day using mobile internet, an increase of 20 minutes from a year before.
- What do we not know?
- One main area of debate surrounds whether cryptocurrencies are good or bad for society as a whole. Bitcoin was founded so that anyone could open their own digital bank account and hold money unregulated by any government. This is helpful for users in countries such as China or Venezuela, where authoritarian governments can raid traditional banks at will. But the anonymity of cryptocurrencies mean they are also popular with criminals looking to transfer money under the radar of authorities.
- Decaying. It comes from the Latin word ‘puter’, meaning rotten.
- Encrypted digital currencies that are exchanged over the internet, bypassing banks. They can be traded and used to buy goods and services online.
- Satoshi Nakamoto
- The name Satoshi Nakamoto is a pseudonym. There is still a great deal of mystery around his identity. In the past he has used a German IP address; he appears to work east-coast American hours and uses British English spelling.
- Cowrie shells
- A form of seashell used for centuries as a means of payment in Asia, Africa, Oceania, and even parts of Europe. The shells continued to be used as money in some areas until the 20th Century.
- King Alyattes of Lydia
- Now a part of modern-day Turkey, the first Lydian coins featured images of lions and bulls.
- To fall or drop straight down at high speed.
- Vint Cerf
- An American computer scientist who is considered one of the founders of the Internet. He won the A.M. Turing Award, the highest honour in computer science, in 2004.
- A state of sulky dissatisfaction. It comes from an old English word, “gruntle”, meaning “to complain”.
- Bitcoin mining
- The process through which specialised computers solve complex computational problems and create new bitcoins.