In 2011, Stephan Thomas produced an animated video explaining how Bitcoin works.
For this 1-minute and 43-second video, he got 7,002 Bitcoins as a reward.
Then, Thomas stored those 7,002 Bitcoins in an IronKey USB encrypted hard drive for safekeeping.
Sorry for the mistake! As you have correctly thought after reading the previous sentence, storing Bitcoin on a hard drive is impossible. Thomas stored the private keys in the encrypted hard drive. The private keys give ownership over the Bitcoin.
Unfortunately, Thomas forgot his Ironkey password, preventing him from accessing the private keys and regaining ownership of those 7,002 Bitcoins.
Why Did Thomas Choose an Encrypted Drive?
Thomas chose a Kingston Ironkey Encrypted Hard Drive because he knows the importance of safely storing digital information, like those private keys for the 7,002 Bitcoins.
Unfortunately, one of the Encrypted Hard Drive functionalities may prove his downfall because the Ironkey Hard Drive encrypts all the stored data permanently after 10 wrong password attempts.
Thomas has only two guesses left to unlock his encrypted USB hard drive. Two guesses away from recovering those 7,002 BTC or losing them 'forever.'
Not Your Keys, Not Your Coins
In short, Unciphered is a collection of reverse engineers, cryptographers, and analysts who have managed to find a way to break into a device rated for FIPS-140-2 level 3, like Thomas' IronKey.
Unciphered wants to give Thomas a practical demonstration to convince him that their capacity to break into an Irokey encrypted drive is legitimate and, if he agrees, to help him recover his keys.
As Unciphered correctly mentions in their letter, Not Your Keys Not Your Coins (NYKNYC).
Because it is NOT the seed phrase, the public key, or the public address that gives you ownership over your cryptocurrencies or crypto assets. Only the private keys prove ownership and lock the assets 'stored' in the Blockchain.
Will Uncyphered Make Waves?
Uncyphered's statement that they can break into FIPS-140-2 level 3 protected devices is very relevant.
Government bodies, corporations, and retail users like you widely use encrypted devices conforming to the FIPS-140-2 Level 3 standard.
So Uncyphered is already making waves and making many encrypted USB drive manufacturers very nervous.
The FIPS 140-2 encryption standard defines four levels, which are:
FIPS 140-2 Level 1: Basic Security
Level 1 focuses on basic security requirements and uses algorithms that do not require secure key management. Security is primarily based on the strength of the algorithms rather than physical protection.
FIPS 140-2 Level 2: Role-Defining Security
Level 2 introduces requirements for physical security mechanisms to protect against unauthorized access. This level addresses concerns related to the physical security of the cryptographic module.
FIPS 140-2 Level 3: Tamper-Evident Security
Level 3 focuses on both physical and logical security. It introduces defenses against attacks to access sensitive information, including tamper-evident coatings and protection against certain environmental conditions.
FIPS 140-2 Level 4: Physical Security with Response
Level 4 is the highest level of security defined by FIPS 140-2. It includes all the requirements of Level 3 and adds further measures to protect against sophisticated attacks, including those aimed at bypassing physical security mechanisms.
Most retail available encrypted USB drives use FIPS 140-2 Level 3, so once the statement from Unciphered proves legitimate, governmental bodies and corporations may need to upgrade Level 4 devices.
Manufacturers may even need to hurry up to develop more advanced technology: What is the assurance that even FIPS 140-2 Level 4 technology is not about to get cracked either?
But for retailers like you and me, there is not yet such a pressure to upgrade because only specialized companies like Uncyphered have the knowledge and technology to crack encrypted drives. And their services do not come cheap.
If you are not already using encrypted USB drives to protect your digital information, consider options to keep important information from malicious hands.
Will Thomas Recover His 7,002 Bitcoins?
Most probably, yes, he will do.
Thomas has declined Uncyphered's offer because he has already made a deal with two other cracking teams. In addition to Unceyphered, other parties can crack driver encryption with FIPS 140-2 Level 3 technology.
The FIPS 140-2 Level 3 may soon become obsolete.
When editing this article, 1 BTC is worth 48,201 USD, so the 7,002 Bitcoins stored in the encrypted hard drive are worth 337,503,402 USD.
We are sure that Thomas and those to whom he is entrusting the encrypted hard drive will take extreme care of it and eventually will manage to recover the private keys.
Then Thomas will be glad that Bitcoin remained untouched for so many years because instead of selling those 7,002 BTC a few years back, he may be able to sell them for a considerably higher return.
After all, we all run into problems and pitfalls, but the most important thing is learning from our mistakes and moving toward our goals.
If you are reading this article, your goal is financial independence.
If so, please reflect on Thomas's story and make sure that you safely store your seed phrases and private keys.
As Thoma's story proves, besides keeping valuable information safe from hacks and scams, you need to consider measures to keep the information safe from accidents, like forgetting a password.
Congratulations on completing this 5-minute digital safety power-up.
We hope this 5 minutes read was worth the time and that you have learned some valuable information.
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