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.
Read more: Engadget