While Bitcoin has a maximum of 21 million coins, it’s likely that the total number of Bitcoin in existence will never reach 21 million. Why? Because so many early adopters of the cryptocurrency have passed away without succession planning, or simply lost access to their digital wallets, leaving their funds irretrievable. If you have incorporated cryptocurrencies into your wealth, it is important to know what happens when you die and how to plan for the administration of your digital assets when that time comes.
The appeal of cryptocurrencies like Bitcoin is that they are decentralized, meaning they aren’t issued or administered by a central authority. However, because of this it is impossible for someone to help retrieve access to a deceased family member’s account, unless of course they have the required security measures to access it. It is therefore crucial that the right measures are put in place prior.
So how can one make the transfer of cryptocurrency as seamless as possible? It starts with education, if you possess a significant amount of digital assets it is important to explain to your loved ones not only how they work but how crypto exchanges operate when transferring funds back into fiat currencies. Balancing security with succession planning then becomes a more complex task, the options below specify what you might consider sharing with loved ones depending on how your digital assets are stored.
Cryptocurrency Exchanges
1. How to log In: Username and Password
2. How to recover account information: Log in details for two-step verification accounts or how to get in touch with customer service.
Hot Wallets (Un-hosted Mobile Wallets)
1. How to login: Wallet Key
2. How to recover account information: A 12-24 word secret seed phrase will be needed
Cold Storage (Hardware Wallet/USB Drive – offline and very secure)
1. Location of the storage device
2. How to login: Wallet Key
3. How to recover account information: A 12-24 word secret seed phrase will be needed
Some recommend that your cold storage hardware wallet is kept in a secure, fireproof safe. You might also consider keeping physical documentation describing each storage instrument as well as the security keys, seed phrases, usernames, and password information with instructions for each. It is important that this information is kept offline and away from the internet, while finding a way to effectively share this information in thorough detail with your next of kin to ensure they know what to do when the time comes.
