How an unexpected death can eliminate digital wealth
Picture 1. Source: https://cryps.pl/wp-content/uploads/2021/07/smierc-bitcoinow-885×498.jpg
According to a survey conducted by the Angus Reid Forum, the tendency among US consumers to share access to their bank accounts changes with age. Respondents under the age of 35 were significantly less likely to share their passwords with loved ones (19% shared their passwords) compared to the over-55 group, whose ratio was 32%. Likely, the younger respondents did not feel the need to share account access with someone. However, imagine a situation where some 30-year-old’s peaceful life was ended by a tragic accident. On top of that, this particular 30-year-old had a collection of NFTs or was familiar with cryptocurrencies and had accumulated quite a large sum in a virtual wallet. And of course, with no plans to die in the next few decades, he left neither the password to the account nor a provision in his will. What will happen to his digitized assets after his death?
How to secure crypto
Let’s start with the fact that a private key is used to secure an account where cryptocurrencies of any kind are accumulated. This security feature can take various forms (such as a QR code, a mnemonic phrase or a 64-digit hexadecimal code). Most of us will rely on our memory, but unfortunately it often fails us. For example, how many times have we forgotten an important anniversary or a loved one’s birthday? It’s hard to count.
However, several ways to secure access to your account are more effective than your own memory. One is the Confidential Information Manager, designed to create a database consisting of stored passwords and IDs. All passwords in this database are encrypted and secured with one master password. A hot or cold wallet can also be effective for securing digital assets.
Using a hot wallet is similar to making online banking transactions – the string of characters that make up the key is stored on a platform that supports cryptocurrency exchange, making it convenient and easy to accept transactions. The second type is a cold wallet – it can be any carrier not connected to the Internet so that digital assets are protected from theft.
Two types of keys
Thanks to a system of two keys: private and public, your cryptocurrencies are both public and secret. The first of the two keys generated for each cryptocurrency holder is the equivalent of an email address. It is visible to other users and provides a means of identification (in this situation, no data is required to conduct transactions using cryptocurrencies). This key is coupled with a private key, which must remain hidden from other users, unlike the public key. Therefore, validating any transaction made with the public key is necessary. One option for securing the private key is to use just any available cryptocurrency wallets: hot or cold.
What will happen to digital assets after death?
The answer to the question posed in the introduction is provided by the mundanity of life. Many stories are circulating on the Internet about people who would be millionaires today if they hadn’t lost their account password or the disk on which they had the data they needed. The same effect can be caused by the unexpected death of the owner of cryptocurrencies or other similarly functioning digital values (such as NFTs) if he fails to secure his assets for his family beforehand. Doing this legally is possible, although there is no central institution to regulate this market.
NFTs can be treated like other tangible property and bequeathed in a will. Before going to the notary, it’s a good idea to identify the NFTs you own, such as creating a list of available assets which should be renewed regularly. Once you have made such a list, the next step is to identify the people to whom you want to transfer the selected assets. In addition to choosing the heirs, it is also good practice to select an executor with knowledge of tokens to help the whole process run smoothly. As you can see, there are so many issues to think about here that it’s a bit daunting to die.
Regaining access to your account
If your digital assets were placed in an account on any cryptocurrency exchanges, the heirs would face the task of contacting the administration of these platforms directly to regain access to the account. Before obtaining such data, they will be asked to present a death certificate, a copy of their will, an identity document and a letter from the person who has been designated to carry out the process of transferring the NFT (executor). Within the platforms themselves, it is impossible to name heirs, and external institutions must supervise the process.
Digital assets are not values that disappear with the death of their holder. To secure the future of one’s family or to donate NFTs for any purpose, it is sufficient to secure the password and prepare a notarized confirmation in the form of a will. Without this, every NFT holder must expect all accumulated wealth to be lost in the digital space after death.
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