I am sure you are familiar with the story of James Howells, the unfortunate chap who threw away a hard disk containing some 8,000 bitcoins, worth hundreds of millions dollars at today’s prices. It’s a story that has been a focus of media attention from the very beginning, but I think it has just taken an interesting turn because the race to find the lost bitcoin is hotting up.
The Lost Bitcoin Story
Sometime in the summer of 2013, Mr. Howells accidentally disposed of an encrypted hard drive contained the private key for 8,000 bitcoins, worth around $765 million at the time of writing. His former girlfriend took the hard drive off to the local council rubbish disposal centre from where it was taken to a landfill site in Newport, Wales. When he realised his mistake, he set about getting together funding and a team of specialists to excavate the site, offering to give the city 30% of the value of the coins (then worth some $70m) if they let him dig.
The site contains around 350,000 tonnes of garbage but Mr. Howells thinks that he can narrow down the search area to some 10,000-15,000 tonnes. It doesn’t matter, though, because the city refused permission because excavating the site would let harmful substances escape “potentially serious risks” to public health and the environment. Having lost that case, which means that he cannot excavate the landfill site, he is now looking into the possibility of trying to buy the landfill site, which is about to be closed and turned into a solar farm, so that he can continue the search.
Personally, I think this would make a great reality television show and I can imagine the whole thing being funded by Netflix, starting with the mundane domestic scene of the hard disk being tossed out, going through the various courtroom battles and appeals and finishing up with teams of volunteers combing through decomposing garbage until the exciting moment when someone finds the black bag and opens it up to find that the disk is still there! And then more excitement as the disk is taken for forensic examination, with a tense wait while top data recovery experts are flown in from across the globe until finally the data is recovered to the sound of popping champagne corks. Great stuff!
There’s even more drama to come though, because James’ race is a race against time. It’s a race to see who gets to the missing bitcoins first: garbage explorers or quantum computers. The truth is that James’ fortune may well be spirited away by remote quantum attackers long before the diggers uncover the missing black refuse bag containing the missing hard disk.
How does this race come about? Well, as I am sure you are also aware, about a quarter of all the bitcoins out there are in wallets that are “lost”, by which I mean the private key for accessing the coins is lost, but the public key for the wallet is known. Knowing the public key does not help you to figure out the private key, of course (if it did, Bitcoin would not exist at all!), because of the mathematics of asymmetric cryptography.
However… it happens that an interesting class of problem that quantum computers find quite easy, whereas conventional computers find near impossible, is recovering a private key given the corresponding public key.
(For the technically-minded, this is because Bitcoin also relies on a particular type of cryptography known as the Elliptic Curve Digital Signature Algorithm. Quantum computers can run algorithms such as Shor’s algorithm that undermine ECDSA in polynomial time.)
A working quantum computer will therefore not only find James’ private key for him but it will also find plenty of others, including the private key to the “Satoshi wallet” which has something like a hundred billion dollars worth of bitcoins sitting in it. That is a pretty big incentive for someone to get hold of a working quantum computer is you ask me!
The landfill site is pretty big, the hard disk is pretty small and no one knows whether it is still in one piece or not. On the other hand, quantum computers are going to get there eventually so, as Tether CEO Paolo Ardoino recently predicted, those lost Bitcoin may not remain lost forever.
This gives my imaginary Netflix series a dramatic conclusion! Who will get to James’ fortune first? Will it be James and his team of environmental engineers or will it be sinister white-coated agents of a foreign power?
The Lost Bitcoin Are In Sight
The race has just taken a dramatic turn because Microsoft have just announced they have a working version of an entirely new kind of quantum computer, based on some unbelievably amazing and unbelievably complicated physics, which is on a path to create a quantum computer more powerful than all classical computers on the planet. It will still take years of experimental engineering before the company can deploy its quantum processing units (QPUs) in data centres alongside the classical graphics processing units (GPUs) but they are on way. This will be so cool (literally, as the quantum computer itself must keep kept at -459.58 degrees Fahrenheit) because a bank of QPUs, sitting somewhere in the Microsoft cloud, would give the Microsoft Copilot AI assistance some amazing new capabilities.
But when? Well, Microsoft believes that the new technology, under development for nearly two decades, will enable the construction of commercially usable and viable quantum computers within five years. So while quantum computing does not pose an immediate threat to Bitcoin as of today — despite the significant advancements that have been made in quantum computing, such as Google’s Willow quantum computer with 105 “qubits”, current estimates are that breaking Bitcoin would require at least 1,536 qubits — it will do pretty soon.
I’m working on the prompt already: Hey Copilot! Can you get all of the lost bitcoin out of the Satoshi wallet and move them over to the Dave Birch Holiday Home in the South of France Emergency Appeal Fund Please Give Generously. Thanks.
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