Thursday, December 21, 2017

Treasure Island

Say you're a pirate. You're in need of a place to store your treasure chest of rare jewels, gold doubloons, pieces of eight, silver, and whatever else that you recently plundered from that ship you make wash ashore onto the rocks in last night's gale.

You drag the chest into a remote area of Nas-sow (Nassau, as pronounced in the Starz series 'Black Sails'). Shovel in hand you count the northerly paces from that big tree over there and start to dig and bury your treasure. You make a map, and mark the spot with an X. You'll be back. Or so you think.

There's a new government in Britain and Nassau and they're cracking down on all those off-shore accounts. You need to move the treasure. Launder the funds into something else. Maybe American dollars?

But where's the map? Did that cute, clever whore Monique filch it from your clothing when you had that little romp last week? Did the ship's cook steal the map? Did it wash away when you had to jump overboard to avoid capture? You see the dilemma. You can't get to your gains. "Oh where, oh where can my fortune be?" It's a more common problem than you might expect. "Where did the dough, go?"

Turns out owners of the digital currency Bitcoin are having the same problem that rum-addled pirate had hundreds of years ago. They can't find their passwords, and therefore can't get to their digital wallets and cash in their Bitcoins, currency that has soared from its initial value, and even value of not so long ago. Bitcoins are hot.

The WSJ in their A-Hed piece yesterday recounts the tale of sudden Bitcoin millionaires who have forgotten their passwords and therefore cannot log into their accounts and cash out. The story doesn't get into it, but do Bitcoins eventually become abandoned property and become escheat funds and revert to the state?  Robin Williams once wondered who gets Mick Jagger's blood when Mick checks into a Swiss rehab to recover from drugs? Well, who gets the Bitcoins, Putin, Trump, Cuomo, the Winklevoss twins? Someone is going to come looking for that treasure.

Access to Bitcoin currency is protected by a private and public key. This key is a stunning series of numbers and letters that would make a permutation count somewhere in the triple exponent range. Virtually uncrackable. The story gives a 62 character example, with each character space having virtually at least 36 possibilities. Take 62 out to an exponent of 32, and you definitely get to come back on the show next week.

Nouveau millionaires who have misplaced their access to their private key have taken to using services that try and crack the private key—for a fee of course. In some instances this has been successful. One desperate "millionaire" is planning to excavate a garbage dump where his thumb drive might have gone. Four years ago.

The whole concept of Bitcoins is hard to understand. What is easy to understand is if you start off with something worth very little, and now it is worth quite a bit, you'd like to cash out. Who needs to understand economics? "Show me the money."

Chainanalysis, a concern that tracks the movement of Bitcoins, estimates that perhaps 2.8 million to 3.8 million, or 23%! of the total supply is lost. At today's valuation, that is an incredible sum of money that my calculator pegs at $72.2 billion. Anyone want to improve the nation's infrastructure?

But who do you collect the "money" from? A server farm somewhere? That pirate thinks he had it bad.

1 comment:

  1. Goldman Sachs wouldn't touch Bitcoin - that says it all.