This is an editorial opinion of Prasad Prabhakaran, COO and co-founder of HexaWallet.
Over time, an estimated 4 million bitcoins have been lost and are now in unreachable wallets. It is unknown how many of those coins belong to HODLers who died without sharing access to their wallets with anyone else.
If you manage your Bitcoin keys, you must come up with a strategy to pass on your wealth, otherwise your bitcoins will be lost forever.
Bitcoin inheritance is still poorly understood as most of the Bitcoin holders are young and therefore, they do not often think about death or inheritance.
Like this Article about Cointelegraph said, “According to a Research 2020 of the Cremation Institute, nearly 90% of crypto owners worry about what will happen to their crypto after they pass away. Furthermore, despite the high level of interest, crypto holders are said to be four times less likely to use a will to receive an inheritance than non-cryptocurrency investors.” .
If bitcoin is a new investment for you, it’s important to do long-term planning, including considering what will happen to your bitcoins 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 wealth you accumulate being in cryptocurrency will no longer sit there.“- Matthew McClintockan attorney specializing in bitcoin estate planning.
What are the current options for Bitcoin inheritance?
- Do nothing.
- DO MYSELF.
- Depository Exchange.
- Closed solutions are expensive.
- Unbuilt crypto solutions have a token offer.
Due to its decentralized nature, bitcoin has some particular safety issues that do not apply to assets under the control of a centralized authority. Bitcoin should be viewed as a physical item of value, like diamonds, precious metals or cash, even though it is digital currency. Anyone with access to your bitcoins can use it, for better or worse. Conversely, your bitcoins will likely be lost forever if you die without giving anyone access to your keys.
One option is DIY storage systems like the Glacier protocol. These non-commercial alternatives have the distinct advantage of being completely private. No one needs to know that the user owns bitcoins or has set up a storage system.
The disadvantage is in usability and instructions. For example, Glacier took eight hours to set up and four hours to withdraw bitcoins during initial testing according to the official website. Despite the fact that it was possible to cut this time in half, each transaction still took several hours. Glacier requires about $600 worth of equipment and a laborious process that includes modifying the laptop hardware, using the command line interface, installing the operating system, etc.
We’re forced to marry other tech enthusiasts because it’s so technical.
Everyone’s money is in their own hands thanks to Bitcoin! You do not need to rely on any financial institution to receive your funds because you control your private key and your bitcoins are stored on the public blockchain. Bitcoins claim to be their own bank or even “self-sovereign” because they have full control over their currency.
Because of this, such controlled inheritance on a custodial exchange undermines Bitcoin’s liberal foundation. You must trust someone with your financial information if you want to transfer your bitcoins to someone after your death. If you access bitcoins through an online exchange like Coinbase, you have given that company your keys and depend on its employees to deliver bitcoins to your heirs when they ask for it.
Some organizations allow customers to essentially lock their bitcoin keys inside many other layers of private keys, which can then be distributed to other signers. While this technology is intended to make bitcoin inheritance simpler, it can also lead to more involved processes like KYC of beneficiaries etc. Some of these inheritance schemes are only available accessible to some customers willing to pay exorbitant prices and only available in specific geographic locations.
Cryptocurrency solution with token offer
“Use DeFi apps to securely manage, store, and transfer your bitcoins…even after your death.”
Doesn’t this sound like a scam to you? We’re not that bad, are we?
Overall, there may be individual variation in how bitcoin HODLers carry out their intentions after their death. While some may choose to trust organizations with their own money and will, others may prefer to go the decentralized route and hoard their own funds while developing legacy strategies. their own.
Bitcoin HODLers deserve a better solution to secure bitcoins for loved ones, and security doesn’t come at the expense of privacy. They are a worthy solution that is easy to set up and maintain, and supports many reliable hardware signers in an air and/or multi-signature manner.
Ultimately, it is important for users to establish a structure that allows their 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 post by Prasad Prabhakaran. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.