Crypto wealth gone in a blaze

When a 70-year-old Los Angeles woman lost her home to a devastating wildfire, she assumed she had already endured the worst. But as the embers cooled, another devastating realization hit her: she had also lost access to her entire cryptocurrency portfolio.

Her private keys—critical to unlocking her digital wealth—had been written on paper and stored in a drawer in her now-destroyed home. Without a backup, her digital assets were gone forever. Her story, which gained traction in a Reddit discussion, highlights a critical vulnerability in the world of crypto: the physical storage of private keys.

My 70 year old aunt lost her apartment in the LA fires.

Most of her savings was in crypto and she lost her wallet and seed phrase, and doesn’t have any backups. (Yes bad setup I know, but it is what it is)

I feel sick. This was all she had.

— Monty (@montyreport) January 8, 2025

Cryptocurrency users around the world rely on private keys to access their digital assets. These keys, essentially long strings of random characters, function like a password to a vault of digital wealth. But if a key is lost, there’s no “forgot my password” option to recover the funds. The only way to access the assets is with that private key.

In traditional finance, banks can replace lost account numbers or issue new credit cards. In crypto, the responsibility falls entirely on the individual. That’s why the question of how people store their private keys is so important—and why the potential consequences of storing them improperly can be catastrophic.

A growing problem

The case of the LA woman isn’t unique. A Reddit user who sparked a discussion in the r/CryptoCurrency community speculated how many private keys were lost in the wildfire, prompting others to share their own horror stories.

One user admitted to losing access to six figures' worth of Bitcoin because their key was written on a sticky note that got thrown away during a move. Another told of a friend who engraved their private key onto a piece of metal but left it at their parents’ house, which was later damaged in a hurricane.

According to Chainalysis, around 20% of all Bitcoin—equating to roughly $80 billion—is considered “lost” due to forgotten or misplaced private keys. 

Why physical storage is risky

Many crypto holders store their private keys on paper wallets, handwritten notes, or USB drives. These methods offer some protection against digital threats like hacking, but they’re highly vulnerable to physical disasters such as fire, flooding, and theft.

Experts in crypto security recommend diversifying key storage methods to reduce risk. Hardware wallets—small devices that store keys offline—are a safer option, but even they need to be stored in secure, disaster-resistant locations.

Some in the crypto community have taken creative approaches, like engraving their keys onto stainless steel plates or storing backups in fireproof safes. Others use secret-sharing services that divide the private key into multiple pieces, stored in separate locations.

But even these solutions aren’t foolproof. In the same Reddit thread, users pointed out that a fireproof safe might protect the key itself, but if the house is destroyed, remembering where the safe was stored—or even accessing the remains—can become an issue.

A matter of planning

The real lesson from these stories is that crypto holders need to think about long-term, disaster-proof planning. Just as people make wills or insurance plans to protect their families, crypto investors must have a strategy for safeguarding their digital wealth against unexpected disasters.

The key is redundancy. Experts recommend storing backups of private keys in multiple locations: a fireproof safe at home, a safety deposit box at the bank, and an encrypted USB drive kept with a trusted family member.

For those who still prefer paper backups, there are options like Cryptosteel plates—metal plates that allow users to engrave their private keys, making them resistant to fire, water, and corrosion.

The cost of complacency

For the 70-year-old LA woman, it’s too late to recover her lost crypto fortune. Her experience is a painful reminder that the cost of complacency in crypto security can be devastating.

With wildfires, hurricanes, and floods becoming more frequent due to climate change, it’s likely that stories like hers will become more common. For crypto holders, the time to prepare is now.

As one Reddit user in the discussion put it: “Your keys are your wealth. Protect them like your life depends on it—because your financial future does.”