(+) Who Will Inherit Your Bitcoins or Other Digital Currency?
The following is a Plus Edition article written by and copyright by Dick Eastman.
NOTE: This isn’t really a genealogy article. However, genealogists are usually very familiar with the reasons for writing a will. Whether the information in this article applies to you or to a loved one, I will suggest that all genealogists and everyone else should be aware of this information.
Do you own Bitcoins or other crypto-currencies? Do your parents or other family members own such digital assets? Even your adult children may have digital currencies and may not have considered inheritance issues in the case of their unexpected demise. If you or any relative who owns crypto-currencies should die unexpectedly, who gets the inheritance? Do the future heirs know how to claim and retrieve the crypto-currency?
Most crypto-currency experts agree that the safest method of storing digital currencies is in a hardware wallet, such as the very popular Trezor and Ledger devices. Use of these high security pieces of hardware almost guarantees that no one can hack in and steal the valuable assets that are stored within the hardware wallet. After all, hardware digital wallets are usually powered off and disconnected from any computer when being used to store assets. How can a hacker steal from a computer storage device that is disconnected and powered off?
NOTE: The only exposure of hardware wallets is for the minute or two that the wallet is being used to add or remove assets on the device. All that is needed is to plug the hardware wallet into your computer’s USB port, launch a program in the computer that was supplied by the manufacturer of the hardware wallet, add or remove funds, and then immediately unplug the hardware wallet. Even during that minute or two, it is unlikely that a remote hacker will be able to connect to the computer, determine that a hardware wallet is in use, figure out which brand of wallet is in use, figure out the required user name, password, and encryption keys, and then manage to transfer the funds to his or her own wallet. It would be practically impossible for any hacker to perform all those steps in the short time a hardware wallet is connected and powered on.
As secure as the hardware wallets may be, the wallets do create a problem for potential heirs. Not only are potential hackers locked out, but future heirs also are unable to access the funds if they do not know the instructions, user names, passwords, and encryption keys required. The decentralized and unregulated nature of Bitcoin and other crypto currencies means that nobody has any way to access funds without the keys to access the hardware wallet.
Trezor, a popular and secure crypto hardware wallet
Unlike a bank or a stockbroker, obtaining a court order along with a copy of the death certificate is useless with a hardware crypto wallet. Nobody – and I do mean NOBODY – knows how to access the funds if the deceased did not share that information or leave instructions behind. There is no backup copy at any corporation’s offices or anywhere else. The company that built and sold the hardware wallet also is unable to see its encrypted contents. Indeed, the hardware wallets are VERY secure.
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