James Howells has long been a well-known person in the bitcoin world. He is best known for literally throwing away 7,500 BTC in the trash in 2013. These bitcoin today would be worth nearly $90 million.
His story is quite trivial: in 2009 he started to mine bitcoin with his computer.
At that time bitcoin was not freely tradable for dollars, so it had no value except to those who accepted it as a form of payment.
Mining bitcoin at the time was quite simple and inexpensive, considering that the cost of bitcoin mining is dependent on the revenue from the miners.
Given that the revenues at the time were ridiculous, as bitcoin did not even have a value in fiat currency, the costs of mining and the difficulty were so low that anyone could mine with any computer.
In this way, Howells was able to collect 7500 BTC, especially because at the time the reward for each block mined was 50 BTC and it wasn’t even necessary to share resources and profits with a pool.
When mining became a more expensive activity Howells stopped mining and ended up selling parts of the computer he had used for mining on eBay, since it had broken down in the meantime.
However, prudently, Howells kept the hard disk on which the private keys to the addresses holding the BTC were stored.
The problem is that in 2013, perhaps forgetting what was on it, he accidentally threw that hard disk in the trash, losing access to the public addresses on which he kept the bitcoin.
The problem is that once lost, private keys are no longer recoverable in any way, and in fact, despite several attempts to recover them, Howells never succeeded, not even after asking for help from the community of bitcoiners.
So “his” BTC still exist on the Bitcoin blockchain, but nobody can use them anymore, not even James Howells himself.
The private keys of Bitcoin, James Howell’s mistake
Howells had made a serious mistake: he did not keep his private keys in a safe place. In fact, it is not advisable to simply keep them on a hard disk, because there are several causes that can lead to the loss of data contained on it.
Private keys should be stored much more securely, particularly in the long term, as they are just strings of text that can simply be written on paper and stored in a safe.
Private keys are also necessary to restore a wallet and recover full access to the bitcoins stored in the public addresses they generate, so they should be stored with extreme care.
It should be kept in mind that only one public address is generated for each private key, so there is a different private key for each address.
Everyone can own as many public addresses as they want, so it is necessary to carefully store all the private keys of all public addresses on which bitcoin are held.
It should also be added that many wallets generate many private keys, and therefore many public addresses, starting from a single seed generally composed of 12 or 24 words, in which case it is sufficient to carefully store the seeds, because from these it is always possible to restore the same identical private keys, by using a compatible wallet.