This is the opening opinion by Prasad Prabhakaran, COO and Co-Founder of HexaWallet.
Over time, an estimated 4 million bitcoins 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 are managing your Bitcoin keys, you must devise a strategy to pass on your fortune, or else you will lose your Bitcoin forever.
The heritability of bitcoin 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 cryptocurrency owners are concerned about what will happen to their cryptocurrency after their death. Moreover, despite the high level of anxiety, crypto holders are said to be Wills are four times less likely to be used in inheritance than non-codified investors.”
If bitcoin is a new investment for you, long-term planning is essential, which includes thinking about what will happen to your bitcoin after your death.
“If you don’t make a copy of that key and put that key in a safe place where people you trust can find it and know what to do with it, the fortune you’ve accumulated in cryptography will go to sit there.“- Matthew McClintock, an attorney specializing in bitcoin estate planning.
What are the current options for Bitcoin inheritance?
- Do not do anything.
- Do it yourself.
- guard exchanges.
- Expensive closed solutions.
- Poorly Created Cryptocurrency Solutions With Token Incentives.
Do not do anything
Due to its decentralized nature, bitcoin has some special security issues that do not apply to assets under the control of a central authority. Bitcoin should be seen as a physical item of value, such as diamonds, precious metals, or cash, even though it is digital money. Anyone who has access to your bitcoin can benefit from it, be it good or bad. In contrast, you will likely lose your bitcoin forever if you die without letting anyone access your keys.
do it yourself
One option is DIY storage systems like Glacier Protocol. These non-commercial alternatives have the distinct advantage of being completely private. There is no need for anyone to know that the user owns bitcoin or has set up a storage system.
The drawback is ease of use and direction. For example, it took Glacier eight hours to build and four hours to withdraw bitcoin during initial testing according to the official website. Although practice can cut this time in half, each treatment still takes several hours. Glacier requires approximately $600 worth of equipment purchase and a tedious process that includes laptop modification, command line interface use, operating systems installation, etc.
We’re only forced to marry other tech geeks because they’re so tech.
People’s money is in their hands thanks to Bitcoin! You do not need to rely on any financial institution for your funds because you are in control of your private key, and your bitcoins are stored on the public blockchain. Bitcoin customers claim to be their own bank or even “self-governing” because they have complete control over their currency.
For this reason, censored inheritance such as that found in a custodial exchange undermines the libertarian foundation of Bitcoin. You must trust someone with your financial information if you want to transfer your bitcoins to someone after your death. If you access Bitcoin through an online exchange like Coinbase, you give this company your key and they rely on their employees to supply your Bitcoin heir when they ask for it.
Some institutions allow customers to essentially lock their bitcoin keys inside multiple layers of other private keys, which can then be distributed among the other two sites. Although this technology aims to make the inheritance of bitcoins simpler, it could also lead to more involved operations such as KYC beneficiary, etc. Some of these inheritance programs are only accessible to certain clients who are willing to pay exorbitant rates and are only available in specific geographies.
Crypto solution with token incentives
“Use DeFi Apps to Safely Manage, Store, and Transfer Your Bitcoin… Even After Your Death.”
Doesn’t this sound like a trick to you? We’re not that bad, are we?
In general, there may be individual differences in how Bitcoin HODLers carry out their intentions after their death. While some may choose to entrust organizations with their money and will, others may prefer to go the decentralized route and self-stock their funds while developing their own succession strategies.
Bitcoin HODLers deserve a better solution to secure Bitcoin for their loved ones and security should not come at the expense of privacy. They deserve a solution that is easy to set up and maintain and supports multiple reliable over-the-air and/or multisig device loggers.
Ultimately, it is critical for users to create a structure that enables beneficiaries to access their bitcoin assets in the event of their death.
Money that can change your life doesn’t really change your life if it can’t be used.
This is a guest post by Prasad Prabhakaran. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. Or Bitcoin Magazine.