What Happens To Your Crypto When You Die?
Ever wondered what will happen to your Bitcoin when you die? It might be a morbid question to think about but it is definitely something to keep in mind, with the growing digital asset industry.
Like any other asset you should have a backup plan for your crypto in case of an unfortunate event. In fact, a back up is really necessary as a recent report from Glassnode, a blockchain data and intelligence provider, found that almost 34% of the total supply of bitcoin has been lost or HODLed by long-term investors.
Cryptocurrency investors’ sentiments also reflect the need for a proper crypto management solution, with 89% worried about how their assets will be handled after they die. With the crypto future having no breaks, it is essential to have a solution/program to secure the future of your accumulated digital wealth. But does the solution have to be a traditional one like giving out your passwords to your family and friends or is there an actual blockchain based solution in the market.
HOW YOUR CRYPTO IS STORED
Wallets are used to store and trade crypto, but not leather wallets. You can manage your crypto wallet digitally on an app or website, or physically on a thumb drive. It depends on what you plan to do with your crypto that determines the kind you choose.
These are used to trade and buy cryptocurrencies. Generally speaking, they are free and convenient, but the downside is that they are less secure due to their constant availability.
The purpose of these is to store crypto for a longer period of time. You can think of it as freezing your crypto.
A hot wallet is like a checking account, where money comes in and flows out. On the other hand, a cold wallet is more like a savings account, where money is parked for a longer period of time. It is possible to have both at the same time.
The person who holds the keys, that is, who is in possession of the randomly generated passwords, has access to your crypto. This could be you, a third-party crypto exchange, or a combination of both.
In the long run, don’t keep more than you are willing to lose on a third-party exchange, says Alex Mejias, founder and managing attorney at James River Law in Richmond, Virginia. “You don’t control the keys. They might freeze your funds or attack you.” Mejias recommends self-custody or hybrid options as your crypto value grows.
MAKE A PLAN FOR LOVED ONES
Name a beneficiary in your will and add a document to your estate plan listing your crypto assets. Add any passwords, PINs, keys, and instructions to find your cold wallet. In the event of your death, your beneficiary can contact customer support at a cryptocurrency exchange.
Or Is there any other way?
Yes, there is an Exchange which is called DIFX who offers its users the Nomination program, a blockchain-based asset transfer system that allows them to nominate friends, family, or practically anyone to be a beneficiary of their DIFX wallet.
The program ensures that in the unlikely event of a user’s demise, their hard-earned digital funds will be transferred to their nominated beneficiaries. Considering that blockchain and cryptocurrencies are being adopted, why can’t these assets also be transferred using these technologies?