This is an opinion editorial from Prasad Prabhakaran, COO and Co-Founder of HexaWallet.
Over time, approximately 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 manage your Bitcoin keys, you must come up with a strategy to pass on your wealth, or your bitcoin will be lost forever.
Bitcoin inheritance is still poorly understood because most Bitcoin holders are young and as a result don’t often think about death or inheritance.
like this Cointelegraph article states: “According to a studio 2020 According to the Cremation Institute, nearly 90% of crypto owners are concerned about what will happen to their crypto after they pass away. Furthermore, despite a high level of concern, cryptocurrency holders are reported to be four times less likely to use wills for inheritance than non-cryptocurrency investors.”
If bitcoin is a new investment for you, planning for the long term is crucial, including considering what will happen to your bitcoin after you die.
“If you don’t create a copy of that key and keep it in a safe place where people you trust can find it and know what to do with it, then the wealth you’ve accumulated in cryptocurrency is just going away.” to sit there.“- Matthew McClintockan attorney with a focus on bitcoin estate planning.
What are the current options for Bitcoin inheritance?
- Do nothing.
- Custody exchanges.
- Expensive Closed Solutions.
- Poorly built cryptocurrency solutions with token incentives.
Due to its decentralized nature, bitcoin has some special security issues that do not apply to assets under the control of a centralized authority. Bitcoin should be seen as a physical item with value, like diamonds, precious metals, or cash, even if it is digital money. Anyone who gains access to your bitcoin can use it, for better or worse. Conversely, your bitcoin will likely be lost forever if you pass away 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 totally private. It is not necessary for anyone to know that the user owns bitcoin or has set up a storage system.
The downside is in usability and orientation. Glacier, for example, took eight hours to set up and four hours to withdraw bitcoins during initial testing. according to the official site. Although practice can cut this time in half, each transaction still takes several hours. Glacier requires the purchase of around $600 worth of equipment and a laborious process that includes modifying laptop hardware, using the command line interface, installing operating systems, etc.
We are forced to only marry other tech nerds because it is so technical.
People’s money is in their own hands thanks to Bitcoin! You don’t need to rely on any financial institution to get your money because you control your private key and your bitcoin is stored on the public blockchain. Bitcoiners claim to be their own bank or even “self-sovereign” because they have full control over their currency.
Because of this, a controlled inheritance like that of a custodial exchange undermines the libertarian foundation of Bitcoin. You must trust someone with your financial information if you want to transfer your bitcoin to someone after your death. If you access bitcoin through an online exchange like Coinbase, you have given that company your key and rely on their staff to provide your heir with your bitcoin upon request.
Certain organizations allow customers to essentially lock their bitcoin keys within multiple layers of other private keys, which can then be distributed among other signers. Although this technology is meant to simplify bitcoin inheritance, it can also lead to more complicated processes like beneficiary KYC, etc. Some of these inheritance programs are only accessible to certain clients who are willing to pay exorbitant prices and are only available in specific geographic areas. locations.
Crypto solution with token incentives
“Use DeFi apps to securely manage, store, and transfer your bitcoin…even after you pass away.”
Don’t you think it’s a scam? We’re not that bad, right?
In general, there can be individual variation in how bitcoin HODLers carry out their intentions after their death. While some may choose to trust institutions with their money and wills, others may prefer to go the decentralized route and store their money while they develop their own succession strategies.
Bitcoin HODLers deserve a better solution to protect Bitcoin for their loved ones and security should not come at the cost of privacy. They deserve a solution that is easy to configure and maintain, and that supports multiple trusted hardware signers in air-gapped and/or multisig mode.
In the end, it is crucial that users establish a structure that allows their beneficiaries to access their bitcoin assets in the event of their death.
Money that could 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 those of BTC Inc. or Bitcoin Magazine.