Following the Bybit hack, Vitalik Buterin highlights that cryptocurrency loss extends beyond theft to include forgotten passwords and lost devices, with victims often remaining silent due to shame.
By Godfrey Benjamin
Edited by Marco T. Lanz
Updated
3 mins read
In the face of the present market loss and Bybit hack, Ethereum co-founder Vitalik Buterin has asked the crypto industry to unite to develop better wallet solutions to prevent crypto loss.
His X post pointed out that while security conversations often focus on theft or hacking, many people lose access to their digital assets due to negligence or accidents.
In a recent post on the social networking site X, Buterin stated that cryptocurrency loss is a major but often overlooked problem. According to the founder, many people lose funds due to forgotten passwords, lost devices, software bugs, or physical damage.
However, he shared a concern that in cases of theft, victims of crypto loss often stay silent. Some feel terrible and ashamed, while others believe recovering their lost funds or assets will be nearly impossible.
Reminder: there's also plenty of people who have lost huge amounts of crypto to *loss* rather than theft.
Software bug, forgotten password, lost device, paper wallet burned down in LA fire, upgraded device without backing up data …. lots of ways for that to happen.
Because…
— vitalik.eth (@VitalikButerin) February 28, 2025
Historically, one of the most well-known cases of digital assets loss is that of James Howells. More than a decade ago, James mistakenly threw away a hard drive containing 8000 Bitcoin BTC $93 393 24h volatility: 0.5% Market cap: $1.85 T Vol. 24h: $30.17 B . Fast-forward to today, the device, now worth hundreds of millions of pounds, is believed to be buried in a landfill.
Still, irrespective of the legal steps, Howells has not been able to recover his Bitcoins. With the landfill set to close in two years, he is now considering new legal action or even buying the site with investors’ help.
A 2020 report by Chainalysis estimated that around 20% of all Bitcoin mined at the time was lost. These funds were trapped in wallets that had remained inactive for years. This suggests that billions of dollars in crypto are permanently inaccessible.
While most lost crypto is never recovered, there have been a few positive cases. One example is Stefan Thomas, who lost access to 7002 BTC after forgetting his password. The process of recovering his assets took him over 11 years, but he eventually regained access with security researchers’ help.
According to reports, the experts who worked on the case used a very unconventional approach. They analyzed the software Thomas had used to generate his password. This breakthrough allowed them to unlock his wallet and recover his Bitcoin.
Though such recoveries are rare, they prove that solutions exist. Buterin believes the industry should focus on making recovery more accessible for all users.
It is worth mentioning that Buterin has long argued for the social recovery of crypto wallets. He believes this method will enable users to regain access to their crypto through trusted contacts instead of relying on a single password.
He also asserted that the industry must unite to develop stronger security solutions. These solutions should prevent hacking and help users recover lost assets. With billions of dollars in crypto locked away, the need for innovation in wallet security is more urgent than ever.
However, some community members think Vitalik Buterin is only reacting to these concerns because of the recent Bybit attack. This hack saw the loss of over $1.5 billion in Ethereum, which was stolen by the North Korean state-sponsored hackers Lazarus group.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
