[NOTE: This transcript reflects the original 2018 episode. There may be updates from this version not reflected here.]
KENNY MALONE, HOST:
One day around Thanksgiving of this year, Syl Turner noticed that it seemed like suddenly everybody was talking about bitcoin. And he thinks to himself, bitcoin. I haven't thought about that in forever. I definitely used to have some of those. And so he goes online, and holy crap. The price of bitcoin was up to $10,000.
SYL TURNER: Hello?
MALONE: Hey, Syl.
TURNER: Hey, Kenny.
It's three days later. It's a Saturday. Syl's at his house outside of Atlanta, and he's starting to get anxious because the price of bitcoin is now up to $11,000. Syl wants to find his bitcoins, and he says there's, like, a chance that maybe they are in his attic on an old hard drive in an old computer. But I'm 900 miles away. I can't get there to search with him.
TASNIM SHAMMA, BYLINE: Testing, three, two, one.
MALONE: So I called my friend Tasnim Shamma...
SHAMMA: Hello, Kenny.
MALONE: ...Who lives closer to Syl. And I asked her, can you please drive over there as soon as possible? And hopefully we can record the moment Syl Turner finds a fortune.
TURNER: Hold on. There's knocking on the door right now, so - hey, come on in. Nice to meet you.
SHAMMA: Nice to meet you as well.
TURNER: You want me to just go straight up to the attic?
MALONE: Yeah, I mean, I guess so. It's kind of what we're here for, right?
TURNER: Yeah. We'll go up to the attic now.
MALONE: Tasnim sent me pictures of Syl throughout this process. And he's got a big, bushy beard. He's wearing a black T-shirt with a picture of a rainbow-colored astronaut kitten. Now, Syl can't remember exactly how many bitcoins he has, maybe one and a half. And they were worthless when he got them, but today they are worth tens of thousands of dollars.
TURNER: All right, so - yeah.
MALONE: Are you in the attic?
TURNER: Yeah, we are in the attic. Luckily it's not super hot.
MALONE: I'm, like, kind of nervous for you, man. This is the biggest sum of money I've ever been hunting for.
TURNER: I'm a little nervous, too. I can't believe this is happening. All right, so...
MALONE: So I've seen a picture of Syl's attic. And I'm not going to say hoarder, but there does appear to be about a waist-high layer...
TURNER: Actually, one of my old roommates...
MALONE: ...Of all kinds of stuff that Syl probably should have thrown away.
So let's dig in. Let's do this.
TURNER: Yeah. Yeah. we can start digging in. I think - all right, there's, like, a broken fog machine. Some kind of table saw thing. Paper shredder. Gameboy Advance. Baby seat. Two TVs that are identical. Goldfish crackers box.
MALONE: Hello, and welcome to PLANET MONEY. I'm Kenny Malone, and we are in the midst of a bitcoin mania. The digital currency that only used to be a big deal in small circles of libertarians and technophiles and anarchists has exploded over the last year. This has created a class of overnight bitcoin millionaires if you happen to know where your bitcoins are. Today on the show, how to lose a digital fortune and maybe how to find it again.
TURNER: I mean, there's a lot of empty boxes, too.
MALONE: Do you want me to stay on the line with you while you clean out your whole attic?
(SOUNDBITE OF MUSIC)
TURNER: Oh, I stepped on something.
MALONE: Syl Turner still digging through his attic in Georgia.
TURNER: There's a frisbee.
MALONE: Syl is a software developer, but like the rest of us he doesn't really understand how bitcoin works. He heard about it right when it launched in 2009, and he figured, can't hurt to have some of this stuff. But it was worth pennies, and so he treated it like loose change - never kept track, didn't really know how many coins he had, and then eventually let it fall between the virtual couch cushions or whatever.
TURNER: All right, so I think it's one of these computers.
MALONE: So Syl's hoping that inside of a computer up here is an old hard drive with an old file called a bitcoin wallet. That would give him access to his bitcoins, which he would then sell immediately, make something like $25,000, and then probably put that in a college fund for his 1-year-old son. So he starts taking these computers apart.
TURNER: I think we should take the hard drive out of this one anyway just in case, but I don't think it's...
MALONE: He's pretty sure that is not the right hard drive, so he pries open a second computer.
TURNER: Let's see. OK. Oh, good, there is a hard drive - there are two hard drives in this one. Oh, my goodness.
MALONE: Oh, my God.
MALONE: Double chances.
TURNER: I really did not expect to see hard drives in here, to be honest.
MALONE: What did you think had happened?
TURNER: My thought was I took the hard drive out of this one. And I think - I really do think it is this hard drive, this 1 terabyte. Oh, man, this is actually really shocking to me because I actually did not think that this hard drive was going to be in here.
MALONE: I mean, should we just check - should we just check that one now?
TURNER: Yeah, let's look at this one.
MALONE: So Syl heads back downstairs with a hard drive. His baby wakes up.
TURNER: Hey, buddy. Hey.
MALONE: He boots up this old hard drive. And Syl is worried that he erased this at some point and used it for video games. But he's hoping, searching for any sign of this wallet file.
TURNER: All right, so I'm - I got to where I believe this would be. There is a bitcoin directory in here where it should be. Oh. So we're going to see if it's in there. There's stuff in here. There's a wallet. There's a wallet. And there's blocks.
TURNER: I don't know what this means, but I'm going to copy this out to my hard drive.
MALONE: Syl is pretty sure this is it. And to find out how much bitcoin is on there, he explains that he needs to wait while another piece of software downloads the entire history of every single bitcoin transaction in the world onto his home computer. It is going to take hours. And unfortunately, there's just no way Tasnim and I can stick around for that.
But how are you feeling right now? Like, what's...
TURNER: OK, so what I'm feeling right now...
TURNER: ...Is my hands are very sweaty. Yeah. I'm just - I'm kind of a little amazed and...
MALONE: The looking for the pennies in the couch cushions, though, that part of it.
TURNER: Yeah, I think I found it, but it's encrusted with some kind of, like - I don't know, like, I spilled beer on the couch and, like, this thing is kind of stuck there and I don't know how to get it off without ruining it yet. Yeah.
MALONE: So I think what we should do, like, when it's ready - I think you and your wife should just record yourselves figuring out how much is in there.
MALONE: Does that sound good?
TURNER: Yeah, that sounds like a good idea. We can do that.
MALONE: So while Syl is waiting to learn his bitcoin fate, I started to get curious about how many Syl Turners are out there in the world. And the first thing that comes up when you search lost bitcoin is the story of James Howells.
(SOUNDBITE OF BBC BROADCAST)
UNIDENTIFIED REPORTER: It was the summer. You have working through the stuff in your office and you found the hard drive. Why did you throw it out?
JAMES HOWELLS: I hadn't used it for three years.
MALONE: This is a BBC interview with James. He threw away a hard drive with $7 and a half million worth of bitcoins on it. In fact, this interview is at the landfill where he thinks the hard drive may have wound up.
(SOUNDBITE OF BBC BROADCAST)
HOWELLS: Yesterday they basically told me that anything that goes into the household scrap bin is compressed and buried.
MALONE: By the way, this interview, it's from 2013. A lot has happened since then. More legitimate vendors started accepting bitcoin. Big-time investors started trading it. And as more and more people saw bitcoin as a way to make money, the price has skyrocketed. Those bitcoins James Howells lost are now worth more than a hundred million dollars.
(SOUNDBITE OF BBC BROADCAST)
UNIDENTIFIED REPORTER: James, I'm sure there's an awful lot of people feeling for you right now. How do you feel stood here?
HOWELLS: Well, absolutely devastated, as you can imagine. I just wish I could go back in time and not throw that drive away.
MALONE: Lost bitcoin has been this legendary thing within the bitcoin community. But it's also been kind of anecdotal, and I wanted to get a sense of the actual scale of this. And, of course, there were economists already on this question.
Are you - oh, so I guess I didn't ask if you - either of you are individual bitcoin holders.
JONATHAN LEVIN: I hold a very small amount of bitcoin.
KIMBERLY GRAUER: I was writing a paper in 2012, I think, on bitcoin. I bought a couple, also a very small amount. But...
MALONE: Oh, is it my turn?
MALONE: I don't have any bitcoin. Nor did I take it seriously at any point until about three weeks ago.
MALONE: This is Kimberly Grauer and Jonathan Levin. Kimberly is senior economist at a company called Chainalysis. Jonathan is the co-founder. The company makes software that can dissect bitcoin transactions to spot money laundering, detect illicit behavior but also just to learn about bitcoin.
What do people actually say - bitcoin, bitcoins?
LEVIN: You can have bitcoins, and bitcoin is, like, the currency unit.
To understand how the James Howells and the Syl Turners of the world can lose or nearly lose bitcoins, we need to clear up a common misconception that I totally did not understand, either. There are no bitcoins, which I know - duh. It's digital. It's not real. But no. No, no. There are not even digital things being traded back and forth with unique serial numbers or whatever. That is not how the system works.
LEVIN: So if I send you bitcoin, I send bitcoin to your account on the bitcoin blockchain.
MALONE: Blockchain - big word, sure. But here is a very nontechnical way of understanding what it means. Imagine with me, if you will, a massive auditorium filled with bitcoin bookkeepers. Now, Jonathan wants to send me one bitcoin. He walks onstage in front of all these bookkeepers, steps up to a microphone. And he's like...
LEVIN: Hello, entire bitcoin universe. As all of your books show, I, Jonathan, have 3 bitcoins to my name.
MALONE: Of course, it would not be a name. It would be an anonymized account number.
LEVIN: I would like everyone here to know that I am giving 1 bitcoin to Kenny.
MALONE: After Jonathan says this, all of these virtual ledger keepers sort of scribble this transaction down, you know, deduct one bitcoin from Jonathon's account, increase Kenney's account by one. And that is a bitcoin transaction. Nothing is really transferred. It's more like an instantaneous adjustment across a whole bunch of ledgers. When people talk about the blockchain, they're talking about this system where there is no central bookkeeper.
And here's where losing bitcoin gets interesting because bitcoin never disappears. All of those computers keeping all of those books all show that my account now has 1 bitcoin, the one that Jonathan gave me. However, if I lose the key to that account, there is no customer service line to call. There's no bank I can plead with. There's exactly one way into this virtual vault, and it is with my private key.
What does a private key look like?
LEVIN: It's a string of letters and numbers that's pretty long, actually.
MALONE: Can you give me an example?
MALONE: Yep - 64 randomly generated numbers and letters. This goes on for a while.
LEVIN: ...33262. Have you got that?
MALONE: Virtually impossible to remember. And if you lose this key and never find it again, the bitcoins inside your virtual vault will sit there for eternity. So when we talk about lost bitcoin, what we really mean is eternally frozen bitcoin accounts. OK. So now we know how bitcoin transactions are recorded. We know about the private key and how you can lose bitcoin. The next big question is, how much bitcoin is lost forever?
GRAUER: This ended up on my plate on my first day.
MALONE: Again, this is Kimberly Grauer, senior economist at Chainalysis.
GRAUER: We were sitting around, brainstorming some of the most interesting economic questions that we could tackle. And this was something that came up right away.
MALONE: Bitcoin is not like other currency. There's no government that is going to just print more of it. The system was created so that, for the rest of time, there will be a finite amount of bitcoin. We even know this number. It's about 21 million bitcoins. And people are now buying and selling bitcoin because it has this scarce resource property. But we don't know exactly how scarce because some of those 21 million bitcoins are already lost forever in a garbage dump, for example. So that's why Kimberly and Chainalysis and really anyone even thinking about bitcoin is interested in this question.
And Kimberly was able to work some fancy analytics and identify millions and millions of bitcoins no one has touched in a long time. And she thought, OK. There are two main reasons those may have gone untouched. The first is that maybe the owners of those coins are just really savvy investors. They bought in early, and they are still holding on, waiting for the right time to sell.
GRAUER: Yes. So these are essentially - if you're in the know in the bitcoin community, they're called HODLers - H-O-D-L-ers.
GRAUER: It's an acronym for hold on for dear life.
MALONE: Hold on for dear life coins.
GRAUER: That is an investment strategy where...
MALONE: HODL is like a mantra for early adopters of bitcoin who believe the sky is the limit for this digital currency. Yes, the coins you bought for 2 cents are now worth $15,000. But hold on for dear life because, remember, you believe they could be worth 50 or even $100,000. So some percentage of those out-of-circulation coins that Kimberly identified are being HODLed. What is the other chunk, then?
GRAUER: Well, a chunk of those are going to be lost.
MALONE: Do we have a name for those people?
GRAUER: I don't have a name for those people.
MALONE: I'm going to suggest...
GRAUER: Losers (laughter)?
MALONE: Losers is not bad - mean. What about OGWIMB, which stands for, oh, God, where is my bitcoin? OGWIMB.
GRAUER: OGWIMB. It's not that catchy of a word.
MALONE: What? No. Come on. It's, like, HODLer is not...
GRAUER: I like it.
MALONE: OK. We're all on the same page here?
MALONE: All right. Good.
Kimberly was able to estimate that of that finite chunk of bitcoins - remember, there will only ever be 21 million of them - there is a painful amount locked away forever.
So this brings our grand total to between...
GRAUER: Two-point-seven and 3.7 million lost bitcoins.
MALONE: I feel like we should just let that sit for a second.
GRAUER: That's right.
MALONE: At current prices, that's more than $40 billion of forever-sunken treasure. And on one hand, it shows the most obvious problem with a ruthlessly decentralized money system. There's no pity. There's no option. If you lose your private key, you lose your bitcoins. In a centralized system, if you had a sack of U.S. dollars, and they caught fire, the U.S. government has an office that will look at your case, maybe even give you new money. We did a whole episode about this.
On the other hand, all of this last bitcoin illustrates something, like, paradoxical, almost, about Bitcoin. We think of it as this ephemeral thing that can just disappear. But it's there forever, and no one's making new bitcoin. There's only going to be 21 million estimated bitcoin in the history of the stuff. And all of this lost bitcoin is reminder that this is digital, yes. And you could lose it easily, yes. But it is truly a scarce digital resource - whatever that means. The other thing to note, Kim says, is that the vast majority of these lost coins were lost in the early years of bitcoin, when the coins were essentially worthless.
GRAUER: People going forward probably won't be losing at such a high rate. Probably most of the losing has already happened.
MALONE: Because who cares about letting a penny fall through the couch cushions? But if you happen to know that it's a very rare, very expensive penny worth $17,000, you're probably going to take better care of it.
GRAUER: Exactly. Even if bitcoin goes back down to pennies, I think people will be more careful about their keys.
MALONE: Because they know one day, it could be this.
(SOUNDBITE OF ARCHIVED RECORDING)
TURNER: All right. So I believe this is probably done.
MALONE: This is the recording Syl Turner eventually sent me.
(SOUNDBITE OF ARCHIVED RECORDING)
TURNER: So we can see what - how much bitcoin is in this wallet. Oh, our baby is crying. Hold on.
MALONE: He and his wife, Jaquie (ph), are sitting next to his computer. Syl's got his digital wallet. He's got his private key. And for the first time in nearly a decade, he is able to open up his virtual bitcoin vault.
TURNER: Let's take a look. You excited about this?
Jaquie: Yeah, I'm nervous.
TURNER: What do you think it's going to be (laughter)? How much do you think it's going to be?
Jaquie: Yeah. I think there's nothing in there.
TURNER: All right. Let's see - 0.02 (laughter) - I think. Oh, wait. I sent 0.02 from this.
Jaquie: Oh. To where?
TURNER: I don't know.
MALONE: What is dawning on Syl is that his bitcoin vault is empty. Not only is it empty. He can check the history, and he can see that this is clearly the wrong account. He must have, like, set up a second account, a test account. A friend must have transferred him a little bitcoin, and then Syl transferred it right back.
(SOUNDBITE OF ARCHIVED RECORDING)
TURNER: I don't know how this works. This must be my other wallet. Oh, man.
Jaquie: The chase continues.
TURNER: (Laughter) I don't know what to do now. I don't know. All right. Well, this is where we're at right now.
MALONE: After the break, we get poor Syl Turner some professional help.
(SOUNDBITE OF PHONE DIALING)
MALONE: Can you guys hear that?
This is Kimberly and Jonathan from Chainalysis again. I got on the phone with them, and we called Syl Turner.
MALONE: I've got Jonathan and Kim on the line.
TURNER: Hey. How y'all doing?
LEVIN: Good. How are you?
TURNER: Doing good.
MALONE: So we have gathered here today to try and resurrect Syl's lost bitcoin. And...
Now, we should say here that the Chainalysis company does not want you to call them about your lost bitcoin. But they are very smart, and they're very kind. And they agreed to hear poor Syl Turner's story and see if there was anything that can be done.
TURNER: All right. So probably 2009 or 2010 - somewhere around there...
MALONE: So he tells them the whole story, how he's been back into his attic, and there is not another hard drive. There's not another private key. But he knows there is another account with bitcoins in it.
TURNER: So that's where I'm at.
LEVIN: OK. Yeah. Well, it's a real shame to hear that it wasn't the right hard drive. Unfortunately, what we need to find the needle in the haystack is even, like, a little bit of a key.
MALONE: What Jonathan is saying is that bitcoin private keys are designed to be unguessable, even by the most powerful computers that we have right now. But if Syl happened to write down part of his key at some point, there are companies that will use that information to help Syl break into his own account. They'll charge him a fee or ask for some of his bitcoins.
TURNER: So there are bitcoin bounty hunters out there.
LEVIN: There are bitcoin bounty hunters out there.
MALONE: But you have to have some piece of your private key. And at this point - and probably forever - Syl does not.
TURNER: Yeah. Unfortunately, we can't actually help you out.
MALONE: I don't know. What kind of things do you say to somebody in Syl's position?
LEVIN: People that have lost their bitcoins - I say tough luck.
LEVIN: I know. This is going to be, like, my deathbed regret. Like, I should've backed up that wallet.
(SOUNDBITE OF LE FAT CLUB AND PIERRE DUBOST'S "WILD BABY ROCK")
MALONE: Have you lost something that you need help finding? Let us know about it. We're firstname.lastname@example.org. Or we're on Facebook, Twitter and Instagram. We're on everything. Today's show was produced by Nick Fountain. Our senior producer is Alex Goldmark. And our editor is Bryant Urstadt. Special thanks this week to Tasnim Shamma for this amazing audio of Syl Turner's hard drive booting up.
(SOUNDBITE OF HARD DRIVE BOOTING UP)
MALONE: And also an apology this week to Jonathan Levin and all of Britain, really, for my terrible accent. If you are looking for something to listen to right now, we have a new show. It's called The Indicator from PLANET MONEY. It's PLANET MONEY's quick take on the news five days a week. Today's show is about the underrated numbers in today's jobs report - the numbers you don't hear so much about that tell us a lot about what's going on in the job market. That's The Indicator from PLANET MONEY. You can find it wherever you find your podcasts. I'm Kenny Malone. Thanks for listening.
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