Approximately 20% of all Bitcoins are lost due to lost private keys, which represents a range of between 68,110 and 92,855 Bitcoin that are recoverable — or between $3.6 and $4.2 billion, a new study says.
Crypto Asset Recovery estimates that about 2.45% of lost Bitcoin is recoverable.
Charlie Brooks, founder of the New Hampshire-based firm, tells GOBankingRates that while cryptos’ inherent decentralization, paired with strong encryption, lend to a very secure system for stores of value – the nature of its decentralization also acts as an Achilles heel.
“The value we add to the market is mostly reaped by retail investors as your typical retail investor is not always as serious about security as an investment firm with billions of dollars in assets under management,” Brooks tells GOBankingRates. “To your average retail investor, the crypto and defi world is full of opportunities but fraught in insecurity by the lack of a safety net in the way of a centralized entity controlling their login details and securing their assets (i.e. a “forgot my password button”).”
Brooks adds that there are solutions to this issue, the most popular being custodial wallets, however, many in the crypto world see custodial wallets as being in opposition to the decentralized nature inherent to blockchain technology.
“This is where Crypto Asset Recovery helps retail investors the most,” he says.
Without having to turn over ownership of their keys, retail investors can hold their own private keys and still retain recourse through Crypto Asset Recovery in the event they lose their password to what they call “common crypto assets,” such as Bitcoin, Ethereum, Litecoin, Dogecoin or dozens of other altcoins.
As explained on its website, “you provide us with a copy of your wallet (or even just your Wallet ID in the case of a Blockchain.info account) and your best guesses as to what your password is. We will use your password guesses to “brute force” your password. Bitcoin and altcoin passwords are secure enough to foil a brute force password attack when the attacker has no prior knowledge of the password. However, when the crypto asset owner knows part of their own password the probability of recovering it increases dramatically.”
The company charges 20% for the first 10 Bitcoins recovered and there’s a sliding scale for the next 10 Bitcoins.
“For example — Let’s say we cracked a 15 Bitcoin wallet, we would charge 20% of the first 10 BTC and 15% of the remaining 5 BTC making our total commission 2.75 BTC,” Brooks says.
“A large portion of Crypto Asset Recovery is conducting brute force attacks on our clients’ wallets to narrow in on a password — this is made substantially easier when we have full transparency and trust with our clients,” he adds.
In terms of clients, a large percentage of the clientele are early adopters who had invested or mined early on as a hobby when Bitcoin was much cheaper, Brooks says.
“Another large demographic we often work with are citizens of developing nations where modern banking solutions are not available. These clients are often very important to us as their wallets oftentimes represent their only “bank account” and means of trading currency,” he adds.
Asked what the largest number of Bitcoins the firm has recovered so far, Brooks says that “this question is hard to answer while keeping our client’s privacy top of mind — I can, however, tell you that our most recent sizeable crack was valued at well over a quarter-million.”
While firms Crypto Asset Recovery are extremely useful, investors should be wary of scams. David Veksler of walletrecovery.info told Cryptonews.com, “there are many ‘Bitcoin recovery’ scams. Almost all of them have two things in common. First, they ask for money upfront. Legitimate services ask for a percentage of recovered funds. Second, they make impossible promises rather than trying to understand your situation and offer realistic advice.”
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This article originally appeared on GOBankingRates.com: Up to $4.2 Billion in Lost Bitcoin Can Be Recovered – Be Wary of Scams