This was not what I expected to be doing with my October. But there I was, on a flight to Hong Kong, hoping I would be able to retrieve $200,000 worth of bitcoin from a broken laptop.
Four years ago, I was living in Hong Kong when a fellow journalist named Mike* and I decided to invest in bitcoin. I bought four while Mike went in for 40; I spent about $2,000 while he put in $15,000. At the time, it seemed super speculative, but over the years, bitcoin surged and Mike seemed downright prescient. I had since relocated to Los Angeles and had been texting Mike about the 2,000 percent rise in our investment.
Strangely, I wasn’t getting much of a response from him. He had 10 times as many bitcoins as I did — shouldn’t he at least have been excited? Finally, when the price of one bitcoin broke $4,000 this summer, I sent him this message: “You do still have those bitcoins right?” That’s when he broke it to me: “Maybe not …”
Here’s what happened: At some point in 2013, Mike had rightfully become concerned about security. He initially kept his coins in an exchange called LocalBitcoins. Exchanges are commonly used to buy and sell cryptocurrency, but you shouldn’t keep your coins there. The most infamous bitcoin scandal to date was when Mt. Gox, an exchange based in Japan, lost 850,000 of its users’ bitcoins.
Exchanges can also suddenly close, as some did in China this year when the Chinese government suddenly made them illegal. Any serious cryptocurrency investor will tell you that your coins are best kept in “cold storage” (an offline hardware wallet). That’s what I’d done with mine, but Mike hadn’t gone that far three years ago when he started thinking about security. Instead, he set up a software wallet. It was a good step, but he would soon learn, it was not foolproof.
Today, there are many sophisticated and intuitive wallet options, but choices were narrower in 2013. Mike used MultiBit, which was popular at the time but has since been discontinued due to numerous flaws.
It’s obvious MultiBit was written in a hurry: The interface is counterintuitive, presenting you with a prominent button that says “create wallet” that allows you to generate new wallets inside the software. Most users only need one wallet, but MultiBit practically demands that you set up multiple. On top of this, it allows you to add multiple passwords to each wallet, even though these aren’t required. With only a few minutes of clicking, you could create dozens of wallets, each with dozens of passwords. In short, it has a lot of room for error.
In March 2014, on an unseasonably sweaty night in Hong Kong, Mike created a new wallet on Multibit, moved his 40 bitcoins into it and then added a password. In the infinite wisdom of the MultiBit programmers, there was no option to double-confirm the password. Hope you typed it in right! The problem was, Mike knew he hadn’t. He tried what he thought was the password, and it was rejected. Again and again he was bounced. His finger had slipped when he entered the password, he was sure of it — there was an extra keystroke somewhere. But which key, and where?
Since Mike was in the bitcoin game for the long haul, he moved on after a week or two of trying and retrying his password. The years ticked by, and the bitcoin price languished for between $200 and 400, so it didn’t feel urgent. He figured that there would be a solution one day, and so he put his 2007 MacBook with his MulitBit wallet in a safe corner of his office, where it quietly died from a motherboard failure.
As I listened to his problem, I got it into my head that I could fix this for him, even though I wasn’t sure how. I knew a fair bit about how bitcoin wallets work, but I was certainly no expert. I guess I liked the tantalizing challenge — after all, bitcoin was skyrocketing, and we were approaching $200,000 of real stakes here. In short, it was worth a shot.
Source/More: My $200,000 bitcoin odyssey