The problem was, that transactions can have "change". So by sending 1 BTC, the client did in fact send 1 BTC to one address and the remaining 8999 BTC to a a newly generated address which is automatically added to the wallet. Since the backup was before this transaction, the backup didn't include the private key to the change address and 8999 BTC were lost.
A really unfortunate incident, as the person simply didn't know this technical detail. It prompted some upgrades to the client, which now generates addresses in advance and stores them in the wallet. When new addresses are needed, the ones from this pool are used first. With a recent client this accident would not have happened. It's still important to know though, that after _sending_ Bitcoins, a wallet might potentially include new private keys that are not in an old backup (if the pool has been completely used up since the last backup).
By the way: All this happened in August 2010, so this wasn't $81,000 at the time.
So the real post should be: How to lose $81,000 in Bitcoin.
Step 1, go back in time to August 2010, and use the old client
Step 2, get $90 worth of Bitcoin, and don't take proper
precautions with your wallet file.
Step 3, wait for Bitcoins to go up 90,000% in value.
The current client prefetches 100 keys, for your protection, and has many other safeguards in place.
Bottom line - Bitcoin software is becoming more robust as Bitcoins are becoming more valuable.
What happens to the 8999 remaining bitcoins? Does a server somewhere think they are allocated to a person (although it doesn't have any name attached to them), effectively taking them out of the pool forever? Or are the bitcoins forgotten and free to be mined again or allocated to somebody else?
Or is this just a question that's so bad it's not even wrong?
Bitcoin does not really understand people or property. It just understands public and private keys. The 8999 remaining bitcoins are presently signed by a public key that has no corresponding private key -- this means they cannot be used in any transaction. Yes, they are effectively lost forever.
What amount of computational power would it take to brute-force recover that private key? For $81,000 it would be worth throwing some considerable hardware resources at it.
This is more a rule of thumb for the receiver; if you send a transaction (based on coins which are already well-confirmed), and don't try to send any conflicting transactions, then it shouldn't disappear as long as it gets one confirmation (even if the block chain forks, it will be resubmitted)
Comments
This comes from this forum post: http://forum.bitcoin.org/index.php?topic=782.0
The problem was, that transactions can have "change". So by sending 1 BTC, the client did in fact send 1 BTC to one address and the remaining 8999 BTC to a a newly generated address which is automatically added to the wallet. Since the backup was before this transaction, the backup didn't include the private key to the change address and 8999 BTC were lost.
A really unfortunate incident, as the person simply didn't know this technical detail. It prompted some upgrades to the client, which now generates addresses in advance and stores them in the wallet. When new addresses are needed, the ones from this pool are used first. With a recent client this accident would not have happened. It's still important to know though, that after _sending_ Bitcoins, a wallet might potentially include new private keys that are not in an old backup (if the pool has been completely used up since the last backup).
By the way: All this happened in August 2010, so this wasn't $81,000 at the time.
So the real post should be: How to lose $81,000 in Bitcoin.
The current client prefetches 100 keys, for your protection, and has many other safeguards in place.Bottom line - Bitcoin software is becoming more robust as Bitcoins are becoming more valuable.
Thanks for the clarification - the blog posting is terrible. It doesn't even specify how the money is actually lost.
What happens to the 8999 remaining bitcoins? Does a server somewhere think they are allocated to a person (although it doesn't have any name attached to them), effectively taking them out of the pool forever? Or are the bitcoins forgotten and free to be mined again or allocated to somebody else?
Or is this just a question that's so bad it's not even wrong?
Bitcoin does not really understand people or property. It just understands public and private keys. The 8999 remaining bitcoins are presently signed by a public key that has no corresponding private key -- this means they cannot be used in any transaction. Yes, they are effectively lost forever.
What amount of computational power would it take to brute-force recover that private key? For $81,000 it would be worth throwing some considerable hardware resources at it.
Also - always wait for your wallet to show at least five (5) confirmations before being (reasonably) certain that your transaction has committed.
General rule of thumb is it takes about 60-90 minutes to be guaranteed that your bitcoins have transferred.
This is more a rule of thumb for the receiver; if you send a transaction (based on coins which are already well-confirmed), and don't try to send any conflicting transactions, then it shouldn't disappear as long as it gets one confirmation (even if the block chain forks, it will be resubmitted)