As cryptocurrency investments become more popular, long-term investors are increasingly concerned with the uncomfortable question: what happens to your bitcoin (BTC) when you die?
According to a 2020 study by the Cremation Institute Almost 90% of cryptocurrency owners are concerned about what will happen to their crypto after they die. In addition, despite great concern, crypto owners are four times less likely to use wills for inheritance than non-crypto investors.
As explained in their whitepaper, Bitcoin is a pure peer-to-peer version of electronic cash that allows online payments to be sent directly from one party to another without the need to involve a financial institution.
As a distributed network, Bitcoin does not have a central authority to control user funds, so no one but the owners can control their assets.
As a result Every year millions of dollars in cryptocurrencies are lost to the death of their owners. Crypto insurance firm Coincover estimates that at press time, around 4 million bitcoin, or $ 68 billion, is out of circulation after losing access, with a large portion likely to be caused by death.
However, this does not mean that cryptocurrencies like Bitcoin cannot be inherited and will inevitably be buried forever with the deceased owner.
Actually, There are a number of ways investors can pass their crypto on to the next generation. However, each method requires some decision-making and planning, as well as a general understanding of how crypto works.
Share keys with trusted family members
Sharing keys with trusted family members is probably one of the easiest ways to transfer your cryptocurrencies. Some of the most famous people in the crypto industry have publicly stated that they use this method to ensure that their crypto assets are transferred.
Hal Finney, an early Bitcoin backer and recipient of BTC inventor Satoshi Nakamoto’s first Bitcoin transaction, bequeathed his cryptocurrency holdings to his children by simply providing their keys. About a year before his death in 2014, Finney wrote:
“These discussions about the inheritance of your bitcoins are of more than academic interest. My bitcoins are kept in our safe and my son and daughter are tech savvy. I think they are safe enough. I am comfortable with my legacy. “
This crypto inheritance practice is straightforward, but may not be suitable for all members of the crypto community. This way of inheriting Bitcoin can also be seen as risky as shared keys are responsible for keeping these assets safe. By choosing this method, make sure your heirs are aware of the plan and some of the best practices for cryptocurrency security.
Some exchanges can unlock access to cryptocurrencies with a death certificate
Although the Bitcoin network itself doesn’t take care of things like inheritance, some cryptocurrency services allow relatives of a deceased customer to access their crypto assets.. For example, Coinbase, the leading U.S. wallet and cryptocurrency exchange service, gives relatives access to a family member’s assets after presenting a series of documents, including a death certificate and last will.
Coinbase users can also designate a beneficiary in their Coinbase account. However, the process is not directly supported by Coinbase, but uses the services of a lawyer for estate planning.
A spokesman for Binance, the world’s largest crypto exchange, told Cointelegraph that the company has similar guidelines for accessing crypto beneficiaries but has not elaborated on the process.. “The beneficiary should contact customer service directly where one of our representatives can guide them through the process,” said the representative.
Cryptocurrency Inheritance Services: Is It Worth It?
There are also some projects devoted to digital asset inheritance. For example, companies like Safe Haven, Casa and TrustVerse are working on their own solutions that will allow people to inherit their crypto assets using blockchain technology and cryptocurrencies.
Officially launched in September, With Safe Haven’s digital heritage platform Inheriti, users can access not only cryptocurrencies like Bitcoin, but also social media profiles like Facebook and Google+. Dujardin Logino, CEO of Safe Haven, said that neither Safe Haven nor Inheriti will store digital assets themselves, but instead will provide a service to store encrypted information about the assets in question. “It is 100% your decision who receives a secure key, as Safe Haven or the Inheriti platform have no idea what is being encrypted,” said Logino.
Logino told Cointelegraph that Inheriti has gained more traction amid the ongoing COVID-19 pandemic:
“In the last few weeks our platform has grown to more than 1,000 unique users in the room. In the COVID-19 situation, there is high demand for our solution from crypto and non-crypto employees. “
While specialized services can offer a bespoke solution to the cryptocurrency inheritance problem, they are generally in the early stages of development and also have a fee. According to Logino, each Safe Haven backup costs between $ 20 and $ 40 in the company’s native token, SHA. A $ 5 monthly subscription is also charged for a Standard Edition solution.