The first major loss of bitcoins, totaling 9,000 BTC

In the early days of Bitcoin, the community was small, and the software was still in its infancy. The concepts of secure key management and transaction processes were not as well-understood as they are today. It was during this early stage that Stone Man, a member of the Bitcointalk forum, experienced a catastrophic loss that would become a cautionary tale for Bitcoin users.
 

Stone Man had accumulated 9,000 BTC through purchases on the first-ever Bitcoin exchange. He decided to transfer these coins to his client running on a Linux live CD distribution of Debian. After backing up his wallet file to a flash drive, he proceeded to send 1 BTC to another address. However, after initiating the transaction, he closed the client before the transaction had any confirmations and shut down the system, which wiped the system disk loaded into memory, including the ./bitcoin folder.
 

Upon restarting the system and restoring the old wallet.dat file, Stone Man discovered that his balance was only 1 BTC, with a transaction showing that he had spent 8,900 BTC to an address he did not recognize. The issue arose from the fact that Bitcoin’s system automatically generated new addresses for change outputs after each transaction. Because Stone Man’s system was launched from a boot CD, all data was lost when the computer was shut down, including the updated wallet.dat file that contained the new change address.