As investing in cryptocurrencies becomes more and more popular, long-term investors are increasingly preoccupied with the embarrassing question: What happens to your Bitcoin () when you die?
Roughly what will happen to their cryptocurrency after they die, according to a 2020 Cremation Institute study. Additionally, despite the high level of anxiety, holders of cryptocurrencies are said to be four times less likely to use wills than non-crypto investors.
Like the White Paper, Bitcoin is a pure peer-to-peer version of electronic money that allows online payments to be sent directly from one side to the other, bypassing a financial institution.
As a distributed network, Bitcoin does not have any central authority to manage users’ funds, so only the owners themselves can control their assets.
As a result, millions of dollars in cryptocurrencies are lost every year due to the death of their owners. Cryptocurrency insurer Coincover estimates that about 4 million or so Bitcoins were out of circulation at the time of publication after losing access, most likely due to death.
But that doesn’t mean that cryptocurrencies like Bitcoin cannot be inherited and will inevitably be buried forever with the deceased owner.
In fact, there are several ways for investors to pass their cryptocurrency to the next generation, but each method requires certain decisions and planning, as well as some general knowledge of how the cryptocurrency works.
Exchanging keys with trusted family members
Exchanging keys with trusted family members is probably one of the easiest ways to convert your cryptocurrency. Some of the most famous people in the cryptocurrency industry have publicly stated that they use this method to ensure that their cryptocurrency fortunes are preserved.
Hal Finney, an early bitcoin supporter and bitcoin creator Satoshi Nakamoto, wanted to get his cryptocurrency for his kids simply by giving away the keys. About a year before his death in 2014, Finney said:
“These discussions about inheriting your bitcoins are not only of academic interest. My bitcoins are kept in our vault, and my son and daughter are also familiar with the technology. I think they are safe enough. I’m fine with my legacy.”
The practice of inheriting cryptocurrencies is simple, but it may not be suitable for everyone in the cryptocurrency community. This method of transferring bitcoins can also be considered risky, since shared keys are responsible for the security of the assets. If you choose this method, then you need to ensure that your heirs are aware of the plan and some others.
Some exchanges may unblock access to cryptocurrency with a death certificate
While the Bitcoin network itself does not care about things like inheritance, some crypto services allow family members of a deceased client to access their crypto suites. Coinbase, the largest cryptocurrency and wallet exchange service in the United States, for example, allows survivors to access the assets of family members after submitting a series of documents, including a death certificate and a final will.
Coinbase users can also specify a recipient in their Coinbase account. However, the action is not directly supported by Coinbase, but does use the services of a estate planning attorney.
A spokesperson for Binance – the world’s largest cryptocurrency exchange – told Cointelegraph that the company has similar rules for granting access to crypto receivers, but did not go into details of the process. The spokesperson said, “The recipient should contact customer service directly as one of our agents can guide him through the process.”
Crypto Legacy Services: Is It Worth It?
There are also many projects dedicated to protecting the heritage of digital assets. For example, companies like Safe Haven, Casa, and TrustVerse are working on their own solutions that allow people to bequeath their crypto assets using blockchain and cryptography technology.
Inheriti’s legacy digital platform officially launched in September, it allows users to inherit access not only to cryptocurrencies like Bitcoin, but also to social media profiles like Facebook and Google+. Neither Safe Haven nor Inheriti will store any digital assets themselves, said Dogardan Logeno, Safe Haven CEO, but rather provide a service to store the information encrypted in the respective assets. “It’s 100% your decision about who gets the security key, since Safe Haven or Inheriti have no idea what you’re encrypting,” Logino said.
Logino told Cointelegraph that Inheriti has received more support in the ongoing COVID-19 pandemic:
“Over the past weeks, our platform has grown to more than 1,000 unique users per room. Due to the COVID-19 situation, we are seeing a huge demand for a solution from people who do not work with cryptocurrencies and non-cryptocurrencies.”
Although specialist services may offer a customized solution to the problem of cryptocurrency inheritance, they are usually in the early stages of development and charge fees as well.