What Happens to Your Bitcoin When You Die?

As cryptocurrency investing becomes more and 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, nearly 90% of crypto owners are worried about what will happen to their crypto after they die. Additionally, despite a high level of concern, crypto holders are reportedly four times less likely to use wills for inheritances than non-crypto investors.

As explained in its white paper, Bitcoin is a purely peer-to-peer version of electronic money, allowing online payments to be sent directly from one party to another without going through a financial institution.

As a distributed network, Bitcoin does not have a central authority to control user funds, so no one other than the owners themselves can control their assets.

Therefore, millions of dollars of crypto are lost every year due to the death of its owners. Crypto insurance firm Coincover estimates that around 4 million Bitcoin, or $ 68 billion at the time of publication, is out of circulation after loss of access, much of it likely caused by death.

But that doesn’t mean that cryptocurrencies like Bitcoin cannot be bequeathed and will inevitably be buried forever with the deceased owner.

In fact, there are a number of ways for investors to bequeath their crypto to the next generation, but each method requires decision making and planning, as well as a general knowledge of how crypto works.

Share keys with trusted family members

Sharing keys with trusted family members is probably one of the easiest methods of transmitting your crypto. Some of the most prominent people in the crypto industry have publicly stated that they use this method to ensure their crypto fortunes are passed on.

Hal Finney, one of the early supporters of Bitcoin and beneficiary of BTC creator Satoshi Nakamoto’s first Bitcoin transaction, bequeathed his crypto holdings to his children by simply providing his keys. About a year before his death in 2014, Finney wrote:

“These discussions about your bitcoin inheritance are more than academic interest. My bitcoins are stored in our vault, and my son and daughter are tech savvy. I think they are safe enough. I am comfortable with my heritage. “

This practice of crypto inheritance is simple but may not be suitable for everyone in the crypto community. This way of bequeathing Bitcoin could also be seen as risky, as shared keys have the responsibility of protecting those assets. If you choose this method, make sure your heirs are familiar with the plan and some crypto security best practices.

Some exchanges may unlock access to crypto 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. The leading US-based cryptocurrency and wallet exchange service Coinbase, for example, allows bereaved people to access a family member’s assets after providing a number of documents, including a death certificate and a will.

Coinbase users can also name a beneficiary on their Coinbase account. However, the procedure is not taken care of directly through Coinbase, but rather uses the services of an estate planning lawyer.

A spokesperson for Binance – the world’s largest crypto exchange – told Cointelegraph the company has similar policies to provide access to crypto beneficiaries, but did not elaborate on the process. “The recipient should contact customer support directly where one of our agents can walk them through the process,” the representative said.

Crypto Legacy Services: Is It Worth It?

There are also 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 crypto.

Officially launched in September, Safe Haven’s digital legacy platform, Inheriti, 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 store digital assets themselves, but instead provide a service to store encrypted information about the assets in question. “It is 100% up to you who gets a security key since Safe Haven or the Inheriti platform has no idea what you are encrypting,” Logino said.

Logino told Cointelegraph that Inheriti is gaining more ground amid the ongoing COVID-19 pandemic:

“Over the past few weeks, we’ve seen our platform grow to over 1,000 unique users in space. With the COVID-19 situation, we are encountering a huge demand from both crypto and non-crypto people for our solution. “

While specialist services may offer a tailor-made solution to the crypto inheritance problem, they are usually in the early stages of development and charge a fee as well. According to Logino, each Safe Haven backup share costs around $ 20 to $ 40 in the company’s native token, SHA. A standard edition solution also charges a monthly subscription of $ 5.