What happens to cryptocurrency when the owner dies? | Share To World

Saturday, March 19, 2022

What happens to cryptocurrency when the owner dies?

  Prak Vichet       Saturday, March 19, 2022

Investors can die and leave a “dead” fortune in the crypto market if they are not prepared in advance.

After leaving the position of vice president of Amazon Web Service, Sandy Carter began to learn and participate in the cryptocurrency market. She is attracted to different cryptocurrencies and NFTs. Carter even spent thousands of dollars to own the NFT Lazy Lion collection.

However, she is concerned about where the crypto fortune will go when she dies.

“How can I plan for the future, when those assets are just numbers on the blockchain and are completely immutable,” Carter told Vox .

The need to legalize crypto inheritance

Sandy Carter is not the only one worried about this. According to Recode , an estimated 16% of US adults invest in cryptocurrencies. Digital assets seem to be everywhere, from Super Bowl ad campaigns to celebrity investment calls on Instagram.

However, in the US, there is still no way to make a will or leave crypto assets to relatives. Cryptocurrency owners can die and leave a huge amount of wealth on the virtual market that no one can access.

Many families have lost a huge amount of wealth because they could not find the keys left by their loved ones. A man named Michael Moody has been unable to unlock the Bitcoin wallet of his son Matthew Moody who died in a plane crash in California. Before that, Matthew Moody was a longtime Bitcoin miner. This means that the amount of cryptocurrency he owns will be very valuable at the moment.

The same story happened with Matthew Mellon, an American businessman who owns $193 million in XRP. However, his team of lawyers could not access the assets because the keys were lost in the US when Matthew was alive. Coincidentally, the XRP management platform was willing to unlock it little by little for Matthew Mellon, so the team of lawyers later recovered the asset. However, this will not be applicable to other platforms like Bitcoin or Ethereum.

According to Recode , cryptocurrencies are not, by nature, inheritable assets. Stored on blockchain technology, cryptocurrency is like a digital ledger that stores all user transactions along with a public key or a private key. In particular, the private key works similar to a password, including long, distinct characters, helping to unlock the user's e-wallet.

However, the difference between a private key and a regular password is that it cannot be recovered if the user forgets or loses it. This means that the heirs will not be able to enjoy this money without the private key of the cryptocurrency.

“Common property types such as houses, cars or clothes will be managed by law. However, with cryptocurrencies, the law does not seem to be able to intervene if users do not have access to crypto wallets,” attorney Pamela Morgan shared with Recode .

Since it is impossible to legitimize crypto inheritance, investors have begun to think of strange ways to help their children and grandchildren inherit their crypto assets. They even plan to store the private key in a safe, then hire professional security services to pass on the property to their children and grandchildren.

Weird Ideas for Inheriting Cryptocurrencies

Basically, nothing will happen to the cryptocurrency if you die. Because it is stored on the blockchain, this type of asset will remain unchanged whether the owner is alive or dead.

On the other hand, in order to inherit crypto assets, the descendants of the deceased need to know how to access it. Many investors decide to go with the traditional way: write the key on a piece of paper and keep it where family members can find it.

In addition, a few others use platforms that help users trade cryptocurrencies online like Binance or Coinbase. These exchanges will hand over investors' assets to relatives if they can prove the right to inherit according to law, similar to traditional banks.

However, many cryptocurrency owners do not like this method for fear of becoming prey for hackers. Some are not comfortable when handing over the management of their assets to a third party. According to Recode , Binance and Coinbase have yet to allow asset holders to specify crypto beneficiaries.

Since there is still no reasonable solution, many individuals have started their own technology companies specializing in the field of crypto inheritance such as Safe Haven, Casa. These businesses allow investors to use multiple layers of private keys and pass many people to lock their crypto assets.

While it makes it easier to inherit cryptocurrency, this method requires a very complex implementation process.

Rudy Steenhoek, an information manager living in the Netherlands, uses an alternative called the “dead man's switch”. He gave his wife a hard drive with the key. Once the wife uses the passcode, Steenhoek will immediately receive a notification. If he does not respond to the above message, the device will automatically interpret the user's death and the wife will have full access to this digital asset.

It sounds complicated, but this technology eliminates the need for Steenhoek's relatives to prove their right to inherit assets with a bank or any other 3rd party service.

On the other hand, the giants can use many other ways to protect their assets such as trusts for family businesses. This group of people will store their digital assets at financial institutions that specialize in providing crypto wallet management services for the rich.

Hundreds of wealthy families have already moved in this direction, Diogo Monica, president and co-founder of crypto-security firm Anchorage, told Recode.

Empty hands because forgot e-wallet password

In general, all crypto inheritance methods try not to let this crypto asset get buried. Because, if the key is lost, those who stay can take years to find the lost person's precious money.

Recently, there have been a series of stories asking netizens for help to find the crypto assets of their deceased loved ones. Many families even have to hire experts in the field of digital investigation to find lost assets.

“If investors don't copy the key and put it in a safe place where their loved ones can find it, their fortunes will just be dead numbers, sitting still. Because they are locked and no one can access them,” said crypto investment lawyer Matthew McClintock.

“Just try asking the stock players. Do they know where those securities will go when they die? Probably not, because they weren't prepared at all. The same goes for cryptocurrencies,” said financial consultant Tyrone Ross.

Source: Zing


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1 comment:

  1. Bitcoin and all other cryptocurrencies are decentralized, meaning they weren't issued by a central bank or authority.

    That makes it impossible for anyone to help access a loved one's account when they die, unless they possess the security key password and/or seed phrase to unlock their wallet.

    Steinco Industrial Solutions, Inc.