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I'll admit to being a complete newbie to Bitcoins.

The whole thing has up until now passed me by, until my interest was peaked by this news story about a gentleman in the UK who supposedly threw away a hard drive containing £4 million GBP of Bitcoins, and is now apparently searching through his local landfill.

I'm a little skeptical to say the least, and have a few questions:

  • Is this technically feasable? I have seen comments about the place suggesting that one individual wouldn't have had access to the computing power needed to mine this many bitcoins in 2009
  • Is there any way to verify this guys story? Surely there is a record somewhere of which bitcoins are registered to who
  • Doesn't Bitcoin have a 'Forgot my password' feature or something similar? Surely something like this exists, or there is some administrative body who could be contacted in this scenario.

Thanks

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  • Yes - it's feasible.

Bitcoins are released at a constant rate determined by the protocol. At the time, 50 Bitcoins were being generated for every block(this is now 25); and blocks are supposed to be found every 10 minutes. Miners compete amongst each other for this prize.

In 2009, you could mine using your computer's CPU and you were only competing with very few other people. There weren't large mining pools and dedicated hardware, so it was easy for anyone to run the client and mine hundreds or thousands of Bitcoins. It was so easy that you wouldn't think that losing your wallet was a big deal.

  • Maybe, but it'd be a lot of work.

All transactions - including mined Bitcoins - are recorded in a publicly accessible global ledger. Many people download the entire transaction history on their own computer, and there are tools for working with it. It might be possible with some detective work to try to track down what address they were likely stored in using the clues given, but it's not easy.

  • Nope - if you lose your wallet those Bitcoins are lost forever.

That's terrible for the person who owned them, but it doesn't impair the rest of the Bitcoin economy. It makes the value of the remaining Bitcoins go up to compensate.

There are already exchanges that will hold your wallet for you if you're worried about things like this. They're more secure than holding them on your personal computer, and in the future it's possible some of them might offer insurance or other guarantees in case they lose your money.

It's a design feature that there's no administrative body who can restore your Bitcoins. You would have to trust this administrative organization not to abuse their power. The developers of the original Bitcoin client have no more power than anyone else using Bitcoin.

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    +1 thanks. I was reading a lot of comments on news sites etc from people who I suspected didn't have a much better understanding than myself so thought I would come here for an authoritative answer – JMK Nov 29 '13 at 13:38
  • Good thinking... most news sites are terrible and the average comments are even worse. – Jannes Nov 29 '13 at 17:53
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If the private key for a Bitcoin address is lost, the coins can't be spent and are effectively considered lost.

Some wallet programs have password protection but Bitcoin itself does not have a "forgot my password" feature.

There is no administrative body. Bitcoin is explicitly designed to not rely on any trusted authority to create the coins or keep track of who has how many. That is recorded in the block chain, which is a public ledger that exists in many copies around the world.

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