What Happens to Your Saved Up Cryptocurrency After You Die?
News flash! A young man living in Colorado had passed away, leaving his family to distribute the money he left behind among themselves. To their surprise and to their luck, the young man had invested quite a sum of money into Bitcoin, the leading cryptocurrency in the world.
Back then, in 2013, Bitcoin had a humble value of $13 which had since grown at a remarkable rate, with the current value of $4,400.
At the very least, the young man had been able to leave behind a small fortune to relieve the grief of the family - if, and only if, the family had access to the man’s “private key.”
Bitcoin is a form of digital currency protected by cryptography. This way, the security of cryptocurrency is guaranteed; not even the best hackers are able to access it. However, it may be too secure, as with the unexpected passing of a Bitcoin trader, his accumulated hard-earned fortune could be lost forever.
Bitcoins, or cryptocurrencies in general, are stored in what is called a “virtual wallet.” A virtual wallet has its corresponding “public key,” which is composed of randomly generated characters visible to anyone. The public key is commonly used in order to receive money from other users.
However, it does not grant access to the virtual wallet’s contents; such is the role of the “private key.” Thus, in order for someone other than the owner to access a virtual wallet, sharing the private key is needed.
And so, if a Bitcoin owner passes away without sharing his private key to any of his family members, the inheritors may never be able to use the money. It’s like owning a safe containing millions of dollars only to lose or forget the code needed to open it.
The only difference is that you can hire professionals to open the safe for you using advanced tools, but a virtual wallet is sealed for life; not even the most skilled and talented hackers can get through encrypted data.
In order to be able to pass down your Bitcoin fortune to your loved ones in case something unfortunate happens to you, there are three possible ways.
First is to simply ensure that someone will attain the private key after your death by writing it down in a sealed document or something similar. Next, one could store the password in a secure flash drive. Lastly, you could entrust your account to a commercial management service, whose job is to deal with cases such as these.
The first two methods could prove to be risky as a family member may be unable to recognize the password as the private key to your virtual wallet; thus ignoring and possibly discarding it. And so, the safest method is the third one; the commercial service.
Luckily for the family members of the deceased, the third one was the method that the young man had followed. Upon discovery of Bitcoin deposits in Coinbase, a well-known wallet and exchange service, the family approached the company with documents in hand. The company, of course, thoroughly reviewed the case, and after confirmation agreed to have the funds transferred to the bank accounts of his family.
Another possible occurrence is that there aren’t any concrete instructions regarding the distribution of Bitcoin in a deceased person’s will. In this case, family members could file for reconsideration, arguing that “he would have wanted me to have it.” If one were to succeed using this approach, then he’d walk away with a single code that unlocks millions and millions of US dollars.