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As cryptocurrency investing becomes more and more popular, long-term investors are increasingly concerned with the awkward question: What happens to your Bitcoin () when you die?
According to a 2020 study by the Cremation Institute, almost what will happen to their cryptocurrency after their death. Additionally, despite a high level of concern, cryptocurrency holders are four times less likely to use wills by inheritance than non-crypto investors.
As in its white paper, Bitcoin is a purely peer-to-peer version of electronic money, which allows you to send online payments directly from one party to another without going through a financial institution.
Being a distributed network, Bitcoin does not have central authority to control user funds, so no one but the owners themselves can control their assets.
As a result, millions of dollars in cryptocurrency are lost every year due to the death of its owners. Insurance company Crypto Coincover estimates that around 4 million Bitcoins, or at the time of publication, are out of circulation after access is lost, with a large portion likely caused by death.
But that doesn’t mean cryptocurrencies like Bitcoin can’t be bequeathed and will inevitably be buried forever with the deceased owner.
Indeed, there are several ways that investors can bequeath their cryptocurrency to the next generation, but each method requires some decision making and planning, as well as some general knowledge of how crypto works.
Sharing keys with trusted family members
Sharing keys with trusted family members is probably one of the simplest ways to pass your cryptocurrencies. Some of the most prominent people in the cryptocurrency industry have publicly claimed to use this method to ensure that their crypto fortune is passed on.
Hal Finney, an early Bitcoin supporter and BTC creator Satoshi Nakamoto, wanted his crypto holdings to his children by simply providing his keys. About a year before his death in 2014, Finney:
“Those discussions about the inheritance of your bitcoins are of more than academic interest. My bitcoins are kept in our safe deposit box and my son and daughter are tech savvy. I think they are pretty safe. I’m comfortable with it. my legacy. “
This cryptographic inheritance practice is simple but may not be suitable for everyone in the crypto community. This way of bequeathing Bitcoin could also be considered risky, as shared keys have a responsibility to protect those assets. If you choose this method, make sure your heirs are aware of the plan and some.
Some exchanges can unlock encryption access with a death certificate
While the Bitcoin network itself doesn’t care about things like inheritance, some crypto services allow family members of a deceased customer to access their crypto assets. Leading US-based cryptocurrency exchange and wallet service Coinbase, for example, allows the deceased to access a family member’s assets after providing a series of documents including a death certificate and a last will.
Coinbase users can also name a payee on their Coinbase account. However, the procedure is not supported directly through Coinbase but rather using the services of an estate planning attorney.
A spokesperson for Binance, the largest cryptocurrency exchange in the world, told Cointelegraph that the company has similar policies to provide access to cryptocurrency beneficiaries, but hasn’t elaborated on the process. “The beneficiary must contact customer support directly where one of our agents can guide them through the process,” the representative said.
Cryptographic Inheritance Services: Is It Worth It?
There are also some projects dedicated to ensuring the legacy 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 technology and encryption.
Officially launched in September, Safe Haven Inheriti’s digital heritage platform allows users to bequeath access not only to cryptocurrencies like Bitcoin but also to social media profiles like Facebook and Google+. Safe Haven CEO Dujardin Logino said neither Safe Haven nor Inheriti will ever personally store digital assets, but they will provide a service to store encrypted information on the assets in question. “It is 100% your decision who gets a secure key as Safe Haven or the Inheriti platform have no idea what you are encrypting,” said Logino.
Logino told Cointelegraph that Inheriti is gaining more traction during the ongoing COVID-19 pandemic:
“In the past few weeks we have seen our platform grow to reach more than 1,000 unique users in space. With the COVID-19 situation we are seeing huge demand from cryptographic and non-cryptographic people for our solution.”
Although specialized services can offer a bespoke solution to the problem of cryptocurrency inheritance, they are generally in the early stages of development and also require a fee. According to Logino, each Safe Haven backup share costs $ 20 to $ 40 in the company’s native token, SHA. A standard edition solution also charges a monthly subscription of $ 5.
