If you died tomorrow, what would happen to your Bitcoin?

In April last year, Matthew Mellon, an early investor in Ripple who was ranked as one of the top ten richest people in digital currency by Forbes, had been struggling with drug addiction for a long time. He decided to try the psychedelic drink Ayahuasca and died of a heart attack. After his unexpected death, hundreds of millions of cryptocurrencies were trapped in the depths of the blockchain, and his family is desperately trying to find them.

Maybe Mr. Nakamoto is living a comfortable life hiding in a small town, but it is more likely that the founder of Bitcoin has left this world, leaving behind millions of unclaimed Bitcoins, not to mention the candy that came out of Bitcoin forks. In most cases, the coins are lost due to carelessness, not due to hackers. As early investors age and their wealth increases, they should consider how their wealth will not disappear after they die. This is a serious issue.

Legal Practice Issues

When owners of large amounts of Bitcoin die, lawyers debate how to transfer their Bitcoin to the deceased's relatives. In the UK, inheritance law applies to cryptocurrencies, but inherited cryptocurrencies are taxed. In China, Bitcoin does not have monetary attributes, but as a virtual commodity it is still protected by law, but there is still a blank on the issue of crypto asset inheritance.

There are several cases of young Bitcoin holders dying, and their families being unable to do anything with their wallets. When the heirs are told that their loved ones have stored all their money in Bitcoin, they panic. On the one hand, it is unclear how to get these cryptocurrencies, and on the other hand, within a few years, their price could skyrocket.

For example, a young man in Colorado, USA, died suddenly. He bought Bitcoin at $13 per coin in 2013. In 2017, the price of Bitcoin rose to nearly $5,000. His family took on the burden of sorting out his estate. These grieving relatives became heirs to a large fortune, and the question was how to get these Bitcoins.

Private key inheritance is wealth inheritance

Bitcoin is a cryptographic asset that can be protected from hacking and theft through encryption technology. It increases the security of the assets in custody. At the same time, if the owner of Bitcoin dies, there is a risk of losing Bitcoin. The family of these holders is likely to lose a huge fortune forever. This is a problem faced by most relatives of cryptocurrency holders.

Bitcoins are stored in virtual wallets, which have two parts: a public key and a private key. The public key is visible to everyone and is the address for sending and receiving cryptocurrencies. The private key allows individuals to individually access their deposits in their wallets. If the owner of the Bitcoins dies without leaving the private key to anyone, then his heirs will not be able to access his wealth. In order to prevent such an event from happening, all wallet owners must create a written copy of their personal private keys. The list of the wallet's private keys can also be provided to the heirs specified in the will.

What if the cryptocurrency is stored on an exchange?

Not all deceased Bitcoin holders expected this to happen. So the relatives of the man who died in Colorado were surprised to see that many of his bank deposits had been transferred to a Coinbase account. They collected a bunch of documents, and with the support of a lawyer, they went to the exchange's management to recover the deceased's relatives' money. Coinbase confirmed the existence of the wallet and transferred the assets inside.

In the United States, digital currency exchanges are legal, and the relatives of investors may be able to claim the deceased's crypto assets through legal procedures. But it is different in China, where exchanges are expressly prohibited, so there is no legal help, and most investors have their crypto assets held in centralized exchange accounts. For the families of deceased holders, the disposal of crypto assets is a big problem, as the exchange may ignore you, and you will not be able to get through legal procedures.

If you died tomorrow, how would you save your cryptocurrency?

Most crypto accounts are not well protected, simply because the balance of funds on the account is too small. But people should not ignore this problem, many early Bitcoin holders are bloody lessons, because in the future, your small crypto assets may be a huge fortune.

You should share your private keys with your loved ones – if you trust them, of course. With the help of a mnemonic phrase, you can easily save the data in your wallet even on a seemingly innocuous piece of paper, just make sure your relatives know where they lie.

Summarize

Death is not far away from us. You should consider whether your crypto assets can be smoothly inherited by your family after your death. This is a serious issue.

(Source: Medium, translated by Xiaoyan)