It’s important for Bitcoiners to plan for the unexpected and protect the future of their assets.
This is an opinion editorial by Prasad Prabhakaran, COO and cofounder of HexaWallet.
Over time, an estimated 4 million bitcoin have been lost and are now in inaccessible wallets. It is unknown how many of those coins belonged to HODLers who died without sharing access to their wallets with anyone else.
If you manage your Bitcoin keys, you must devise a strategy for passing on your wealth, or your bitcoin will be lost forever.
Bitcoin inheritance is still poorly understood because most Bitcoin holders are young and, as a result, do not often think about death or inheritance.
As this Cointelegraph article states, “According to a 2020 study by the Cremation Institute, nearly 90% of crypto owners are worried about what will happen to their crypto after they pass away. Furthermore, despite a high level of concern, crypto holders are reportedly four times less likely to use wills for inheritances than non-crypto investors.”
If bitcoin is a new investment for you, it’s crucial to plan for the long term, which includes considering what will happen to your bitcoin after your death.
“If you don’t create a copy of that key and put that key in a safe place where the people that you trust can find it and know what to do with it, then the wealth that you’ve accumulated in crypto is just going to sit there.” — Matthew McClintock, an attorney with a focus on bitcoin estate planning.
What Are The Current Options For Bitcoin Inheritance?
Do nothing.
DIY.
Custodial Exchanges.
Expensive Closed Solutions.
Ill-constructed Cryptocurrency Solutions With Token Incentives.
Do Nothing
Due to its decentralized nature, bitcoin has some special safety issues that don’t apply to assets under the control of a centralized authority. Bitcoin should be seen as a physical item with value, like diamonds, precious metals, or cash, even though it is digital money. Anyone who obtains access to your bitcoin can utilize it, for good or bad. In contrast, your bitcoin will probably be lost forever if you pass away without giving anyone access to your keys.
DIY
One option is DIY storage systems such as the Glacier protocol. These noncommercial alternatives have the distinct advantage of being entirely private. There is no need for anyone to know that the user owns bitcoin or has set up a storage system.
The disadvantage is in usability and guidance. Glacier, for example, took eight hours to set up and four hours to withdraw bitcoin during initial testing according to the official site. Even though practice can cut this time in half, each transaction still takes several hours. Glacier necessitates the purchase of about $600 in equipment and a laborious process that includes modifying laptop hardware, using the command-line interface, installing operating systems, etc.
We are compelled to only marry other tech nerds because it is so technical.
Custodial Exchanges
People’s money is in their own hands thanks to Bitcoin! You don’t need to rely on any financial institution to get your money because you control your private key, and your bitcoin is stored on the public blockchain. Bitcoiners claim to be their own bank or even “self-sovereign” because they have complete control over their currency.
Because of this, a controlled inheritance like that on a custodial exchange undermines the libertarian foundation of Bitcoin. You must trust someone with your financial information if you wish to transfer your bitcoin to someone after your death. If you access bitcoin through an online exchange like Coinbase, you’ve given that company your key and depend on its staff to provide your heir your bitcoin when they ask for it.
Expensive Solutions
Certain organizations permit customers to essentially lock their bitcoin keys inside multiple layers of other private keys, which may then be distributed among other signers. Although this technology is meant to make inheriting bitcoin simpler, it may also lead to more involved processes like beneficiary KYC, etc. Some of these inheritance programs are only accessible to certain customers who are willing to pay exorbitant prices and are only available in specific geographic locations.
Crypto Solution With Token Incentives
“Use DeFi apps to securely manage, store, and transfer your bitcoin … even after you pass away.”
Does this not sound like a scam to you? We’re not that bad, are we?
Summary
Overall, there may be individual variation in how bitcoin HODLers carry out their intentions after their death. While some may opt to entrust institutions with their money and their wills, others may prefer to follow the decentralized route and self-store their money while developing their own succession strategies.
Bitcoin HODLers deserve a better solution to secure bitcoin for loved ones and security shouldn’t come at the cost of privacy. They deserve a solution that is easy to set up and maintain and supports multiple trusted hardware signers in air-gapped and/or multisig manner.
In the end, it’s crucial that users set up a structure that enables their beneficiaries to access their bitcoin assets in the event of their death.
Money that could change your life isn’t truly life-changing if it can’t be put to use.
This is a guest post by Prasad Prabhakaran. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
Entropy, a natural phenomenon, is closely related to money and information energy — Bitcoin as information is a reduction of entropy.When Buckminster Fuller was asked by a 12-year-old boy how he would suggest solving international problems without violence, he answered: “I always try to solve problems by some artifact, some tool or invention that makes…
The latest cryptocurrency hedge fund report by PricewaterhouseCoopers found respondents predicting a $100,000 bitcoin price by end of year.PricewaterhouseCoopers (PwC), one of the “big four” accounting firms, has released its “3rd Annual Global Crypto Hedge Fund Report 2021” in conjunction with the Alternative Investment Management Association (AIMA) and Elwood Asset Management.The report underscored the success…
Canadian investment manager Ninepoint will invest management fees in forest conservation to offset the carbon footprint of its bitcoin ETF.Ninepoint, a Canadian investment firm with $8 billion in assets under management, will offset the carbon costs of its bitcoin exchange-traded fund (ETF) using a portion of its management fee, according to a recent release.“Bitcoin is…
The country did not pass a bill that would have clarified rules regarding the cost of electricity imposed on bitcoin miners.The Paraguay legislature did not pass a bill that would have regulated cryptocurrency mining in the country.The bill, originally passed in July of 2022, was subsequently vetoed by President Mario Abdo Benítez in August, which…
The city seeks to establish itself as a financial hub by establishing a licensing regime in order to allow the retail trading of bitcoin and cryptocurrencies.Hong Kong plans to legalize the retail trading of bitcoin and cryptocurrencies contradicting the city’s position in recent years, as well as China’s ban on such services, per a report…
While many accept that the process of hyperbitcoinization is a given, we shouldn’t be so ready to revel in our victory.Bitcoiners are optimists.When Satoshi Nakamoto wrote and released the first code that began the Bitcoin experiment, it was an inherently optimistic act in response to the economic and monetary turbulence referenced in the genesis block.Satoshi…
BTC Inc. the leading provider of Bitcoin-related news and events, is thrilled to announce that Marathon Digital Holdings, Inc. (NASDAQ:MARA) ("Marathon"), a leader in supporting and securing the Bitcoin ecosystem, has signed a continued sponsorship deal, solidifying its position as a main sponsor of The Bitcoin Conference for the next four years. The agreement includes Marathon’s…
Wow, we finally hit $100,000 bitcoin. What a time to be alive! A cypherpunk experiment started as magic internet money is now the 7th largest asset globally, surpassing a $2 trillion market cap. But make no mistake — we're just getting started. 2025 will be the year of Bitcoin. $100K feels like the mere beginning.
“Gradually, then suddenly,” goes the Hemingway trope about going bankrupt that Bitcoiners have so enthusiastically adopted. When crypto exchanges, stablecoins and banks are collapsing left and right, it looks suspiciously like we are already in the “suddenly” portion. And it is suddenly that currencies of the past have moved from the pocketbooks to the history…