Even before we begin, let us make one thing very clear. We are not pessimists but just want to keep things more realistic. Following this theme, it becomes important that we address this reality. What happens to your Bitcoins if you die tomorrow?
With the lack of Gun control, random terrorist activity or even a case of bad reflexes while driving, these act as reasons enough for us to lose our lives. It can happen today, tomorrow or even in the near future. When it does, there is a very good chance your Bitcoins may die with you.
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Do not despair. There are ways through which you can make them live on and come to the aid of your loved ones in their times of need. All you need to do is cover your tracks in few matters.
Inheritance rules and laws do not apply on Bitcoins. Banks usually have policies in place which cause the least amount of grief to the bereaved family. All they need, a couple of documents signed by witnesses and the Death Certificate. That’s all that takes to transfer funds.
Bitcoins on the other hand are mined. Many a times the family members do not even know of their existence. The Blockchain on which they are stored or the wallet on which they are kept is protected with a long, at times very long, 70 character algorithm that acts as a key. The Blockchain itself may be impenetrable, but the key in question needs to be guarded preciously. People are known to hide it well.
Another factor that comes into play is the law. Legally, it is not permitted to access a dead man’s Crypto storing wallet. The laws in place don’t even hold any rule of transference as far as Virtual currency is concerned. For them, the cryptos don’t exist in the real world, hence virtual identity dies with its owner. (similar to a Facebook account)
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With this in mind, how do you prepare for the future? Is there no solution?
The logical thing, that needs to be done is to follow the government protocols and have an ironclad Will and Testament prepared.(we suggest you refer with your legal representative) In this, you have to specify that you have a Wallet which holds all your Bitcoins that needs to be passed onto the next of kin. It’s account number and key can easily be stored onto a hard drive and stored in a locker. The executioner of the will must be in the know and hence trust worthy enough to inform the family about the whereabouts of the hard drive. ( a risk we know, but until and unless the laws change, this is a risk that needs to be taken) Do not under any circumstances, write it down on a piece of paper. That is a catastrophe waiting to happen.
The other option that we can use, is when a person passes on, he sets a failsafe of about 30 days. After the duration ends, an automated email with a broken down wallet number and a part of the key can be sent to the next of kins. In this manner, they can come together and access the wallet and upon entering the key either transfer into currency the Bitcoins or transfer them to their own wallets. ( while this may sound very James Bond, trust us, this is easily doable in this day and age) Again, the risk factor that arises here, is in the form of a cyber attack that can take place on your cloud service or on your email portal.
While the above mentioned hypothetical solutions above may seem risky, (which they are) there is always the technical solution. Coinbase.
Probably the largest and popular exchange service provider Coinbase transfers cryptocurrencies to the next of kin with the following set of rules.
- Death Certificate
- Last Will and Testament
- Probate Documents (either Probate, Letters Testamentary, Letters of Administration, Affidavit for Collection or Small Estate Affidavit)
- Current, valid government-issued photo identification of the person(s) named in the Letters Issued
- Letter signed by the person(s) named in the Probate Documents instructing Coinbase on what to do with the balance of the Coinbase account. If you want to receive the digital currency in USD, you will need to create a Coinbase account.
These step of verification relax our mind from worrying about compromising our wallet and the key. As more and more such services start up, we are sure that the government too shall come up with a legislation which shall make this process easier.
A difficult time need not be made more harrowing with the added tension of worrying about financial transactions. Plan ahead and protect your family from added stress. Fear the Reaper!