Tuesday, February 13, 2018

Bitcoin dilemma: how do your heirs gain access to your cryptocurrency assets if you die suddenly

Since the cryptocurrency phenomenon is still very new in many aspects, there are numerous real world problems that could make access and use of your coins unassailable in the instances of either an accidental death, or that of natural causes.

Take for instance the case of an early adopter of Bitcoin.  Back in 2012 a 26 year old miner of the cryptocurrency died suddenly in a plane crash and no one in his immediate family was able to access his Bitcoin accounts or wallets.

Five years ago, Matthew Moody was killed during an observational flight when the two-seater plane he was in crashed flying over a canyon in Chico, California. 
His father, Michael Moody, knew his 26-year-old son had been mining Bitcoins — today worth thousands of dollars each — but had no idea how many he had or how to find them. Michael Moody has spent the past three years seeking the answers.  
“My son was actually one of the earliest people to mine it,” said Moody, a retired software engineer. “He used his computer at home to mine Bitcoins when you actually could do it that way and he had a few we think.” 
The decentralized and unregulated nature of Bitcoin means that without the keys to access his son’s digital wallet, hosted by blockchain.info, Moody has no way of accessing any funds. And it’s almost impossible to find out whether a person is sitting on peanuts or a fortune, as wallets can contain an unlimited number of unique addresses, or identifiers, with Bitcoins assigned to each. Without knowing every address, it’s not possible to locate every piece of currency. - Bloomberg
The thought of an early demise by anyone who is still young is an age old dilemma that supersedes even this era of cryptocurrencies.  In fact very few below the age of 30 even own a Will or some other legal document that spells out to beneficiaries how they wish to divide their assets.

And while dealing with probate when it comes to assets and accounts in the regular financial system is difficult enough, it becomes nearly impossible to gain access to one's cryptocurrencies if they do not have a plan in place to get the necessary keys to trusted entities or individuals should someone in ownership of a cryptocurrency pass away.

This is why when conducting any form of investing, one must always have a plan on how these assets can be dealt with should something unforeseen come to pass, such as an unplanned death or one becoming incapacitated.  Otherwise over time, cryptocurrencies like Bitcoin may actually lose large portions of their supply because the encryption that helps protect cryptocurrency owners from theft and fraud is the very same structure that could lock them out forever if something happens to you where you are the only one who knows the access code.

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