You can store your key in a software wallet on an exchange service’s server or in a software wallet on your own computer or mobile phone - but those are vulnerable to remote attack if anyone on the internet is able to get your key. You can’t sell or spend your currency without the key (or the string of words used to derive the key, also called the seed) - but if anyone else gets hold of it, they can grab your coins in a single anonymous transaction from anywhere in the world. The only way to own cryptocurrency on the blockchain is to have sole possession of a private key associated with a block of currency - but managing those keys has been a, sometimes high-stakes, challenge from the beginning. And with potentially millions on the line, Reich and his friend vowed to find a way inside. It would be hard to get into the wallet without the PIN - but it wasn’t impossible. By the end of 2020, it would be worth more than $400,000, rising briefly to over $3 million. He was willing to take the loss - until the price started to rise again.įrom a low of around $12,000, the value of their tokens started to skyrocket. Reich gave up and wrote off the money in his mind. When they reached a dozen tries, they stopped, afraid to go further. After 16 guesses, the data on the wallet would automatically erase. They tried guessing what they thought was a four-digit PIN (it was actually five), but after each failed attempt, the wallet doubled the wait time before they could guess again. Reich decided he wanted to cash out, but his friend had lost the paper where he’d written the PIN and couldn’t remember the digits. Reich and his friend chose a Trezor One hardware wallet, set up a PIN, and then got busy with life and forgot about it.īy the end of that year, the token had sunk to less than a quarter of its value, come back up, and then crashed again. At first, they held the tokens with an exchange based in China, but within weeks, a broad crackdown on cryptocurrency by the Chinese government meant they would soon lose access to the exchange, so they had to transfer everything to a hardware wallet. In early 2018, Dan Reich and a friend decided to spend $50,000 in Bitcoin on a batch of Theta tokens, a new cryptocurrency then worth just 21 cents apiece.
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