What happens when you leave a small amount of money in a dormant Bitcoin account for several years? Peter Vogel details his journey.
It has been several years since I last wrote about cryptocurrencies in this space.
Actually, I should correct that previous sentence by changing one word from the plural to the singular. You see, back then, there was just one cryptocurrency, the grandfather of what has since become a burgeoning field.
Yes, I’m talking about Bitcoin, the world’s first cryptocurrency, the digital currency created by the mysterious Natoshi Sakomoto, as described in a detailed paper under that byline. Whether or not Natoshi Sakomoto ever existed remains one of the mysteries of the field.
The time I last wrote about Bitcoin here, that particular cryptocurrency was trading in the couple of hundred dollars range for a single Bitcoin.
It had become a topic of interest in my computer courses and I talked regularly with students about the then-nascent field.
I decided to incorporate Bitcoin into my annual physics bridge engineering contest by awarding two cash prizes to individuals who came closest to predicting the strongest bridges in the event. One prize would be for a teaching colleague, and one would be for a physics students.
As it turned out, I presented the two winners with the equivalent of $50 each in Bitcoin. At the time, this represented 0.17 Bitcoin each. In order to present the prizes, I had each recipient install a Bitcoin wallet on their phone and I then flashed the 0.17 BTC to those phones from my phone through a QR (quick response) code.
My colleague, not really understanding the nature of a cryptocurrency, sold his Bitcoin prize the next day, using a site where various items can be traded in for gift cards. He took a $10 hit and exchanged the $50 worth of Bitcoin for a $40 gift card for Amazon purchases.
On the other hand, the student kept his prize through several years. When Bitcoin peaked in December 2017, that $50 prize had become more than $4,000 (in Canadian funds).
It was in December 2017 that I decided to go looking for the Bitcoin wallet that I had used to disburse those two prizes back in June 2015. I knew I had left a small residual on the phone, an amount worth no more than say $15. There was no point looking on the phone through which I had conducted the initial transactions. It was broken and resisting all attempts to restart it.
Fortunately I had made a backup of the wallet on Google Drive. However, I first had to remember the password on the wallet. Within a few attempts it was open. Thank goodness!
As it turned out that was just the beginning. Bitcoin transactions are verified through something called the blockchain. Because the wallet had effectively been offline for several years, there was a delay of several hours as the wallet was checked against some 44 months of transaction data from the Bitcoin network.
Eventually the synchronization was complete. The wallet was ready for use. It still contained the remnants of the 2015 transactions, all of about 0.0656 BTC (the denomination symbol for Bitcoin).
Then and there I decided to sell the remaining Bitcoin, keeping just a tiny residual so that the wallet remained active. That evening, Bitcoin was climbing in value, having just crossed US$16,000 .
Although this was still some way from Bitcoin’s peak later on, close to $20,000, the 0.0656 BTC had morphed from some $15 to over $1,000, again in U.S. dollars. There was a small transaction fee, but there was enough left to purchase a new cell phone!
I should point out that the idea for giving out the two Bitcoin prizes had nothing to do with investment. It was simply to provide an opportunity to test out a new technology. Similarly with the residual left in my own digital wallet. It was intended to be used for some online purchase.
Shortly after that transaction Bitcoin began a prolonged pullback, eventually dropping below $10,000 at the end of January, dipping into the $5,000 range before moving up into the $9-10,000 range as this column went to press.
Oh, I should add that there is still more to recover from that long-dormant wallet. In the intervening years there have been several offshoots from Bitcoin. Each of these so-called forks has generated additional cryptocurrency that I have yet to recover. There is some Bitcoin Cash, and some Bitcoin Gold, each in the amount matching what was in the digital wallet at the time the forks were generated.
Of course, the value of those additional cryptocurrencies will fluctuate independently of the value of Bitcoin itself and generally speaking these are valued much lower than their parent.
If you are interested to see the value of Bitcoin in real time, check out https: //bitcointicker.co.
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