If you died tomorrow, what would happen to your crypto? Regardless of how far off you think that day might be, this is a question that has slowly started to creep up on the cryptocurrency community without anyone really noticing.

When a technological revolution occurs, it often takes the surrounding infrastructure – particularly the regulatory – years to catch up. This can be seen most starkly in the example of legal highs where successful chemical experimentation moved at such a pace that it had lawmakers scrambling to keep up.

The question of cryptocurrency inheritance is slightly different in that it doesn’t necessarily require more regulatory input; but simply a way to navigate the innate decentralization and anonymity of the crypto itself.

It’s estimated that around $20 billion worth of Bitcoin alone has already been lost, either due to negligence or because their owners died without anyone knowing about their portfolio.

One Reddit user even compiled a spreadsheet of wallet addresses which have remained dormant since Bitcoin was worth under $10. In 2015 there were over 3 million Bitcoins lying untouched and inactive in ‘dead’ wallets. Assuming the rate of loss continued as it began, there could now be close to 5 million inactive Bitcoins.

And this is only Bitcoin’s numbers. How many people bought up a stack of successful altcoins when they were priced at $0.0001, only to have forgotten about them, or passed away before they could be cashed out?

Bitcoin Miner Dies in Plane Crash

In 2013, a crypto enthusiast and Bitcoin investor, Matthew Moody, died in a plane crash and passed away without giving anyone access to his wallet details.

Now, five years later, the man’s father, Michael Moody, is still searching for ways to uncover his son’s fortune, which could be worth an untold sum considering how much Bitcoin has grown in value since then.

Moody’s case, while not rare, is particularly emblematic of the issue of the hand, and poses questions to the crypto community at large. Michael Moody stressed the need for young people in particular to get wise to the process:

“[Young people] need to be better educated about the steps needed to be taken to ensure their investments are properly secured, both for themselves and for future heirs.”

Even though cryptocurrency makes it hard to easily pass on your details, especially to someone who isn’t so technologically savvy, there are still ways to ensure your loved ones inherit your digital fortune.

But as is often the way of things in the crypto space, the success of these measures will largely depend on your own vigilance and attentiveness.

Dead Man’s Switch

This semi-automated method of estate planning involves a computer program which emails you at regular, specified times and awaits your reply.

If the program doesn’t receive a reply, it automatically checks the death certificate records for notification of your passing. If it finds such a record, or you simply don’t reply within a specified period, it will transfer the contents of your cryptocurrency wallets to a specified account which you set up beforehand.

Assuming the reliability of your chosen automated program, the dead man’s switch method can be relatively full-proof. However extreme consistency is required on the part of the user, as not replying to an email could mean the sudden transfer of all your coins before you wanted them to be moved.

Draw a Roadmap

The simplest way to deal with the inheritance issue would be to simply write out all of your details and hand them to your chosen beneficiary.

One piece of paper containing private keys, exchange login details and associated fiat accounts could take care of things in one fell swoop.

How to Keep Your Recovery Seed Safe

By the same token, however, everything you own could be lost in the same fell swoop if your beneficiary loses the piece of paper and it falls into the hands of someone else. In this case you can kiss goodbye to your stash and your loved one can kiss goodbye to their inheritance.

Likewise, storing all of your details in one place online is just as dangerous, if not more so, and lacks in security what it makes up for in convenience.

The biggest issue here is the sticky issue of how much you trust your beneficiary. Handing them the keys to your personal fortune after you’ve died in one thing, but entrusting them with it while you’re still here takes a lot of surety on your part.

Additionally, it may be dangerous to write sensitive details, such as a private key, directly on to your will since the document will become a matter of public record following your death, and may reveal your key dangerously early.

M-of-N Transactions

This system involves splitting access to your funds between multiple trusted people. The only way to access an account via M-of-N, is for a certain number of your chosen signatories to provide their details in tandem.

For example, if you split your details among (1) your lawyer, (2) your wife, (3) your son, (4) your daughter, and (5) your estate planner; then it would only take a specified number of their signatures, say three, to gain access to the account.

This solution spreads the risk around without all of your trust being put in place, or person. The only threat here would be in the result of your relationship breaking down with three out of the five signatories. It’s not uncommon for wives to run off with their husband’s financial manager.

Group Signatures

This method operates on the same basis as M-of-N transactions, but requires the presence of every one of your chosen signatories instead of just a majority.

This gives an extra layer of security as it reduces the chances of 3/5ths of your group turning on the other 2; however it also comes with its own problems. Specifically, if one of the group passes away or simply loses their details, it could mean that no one in the group gets access to the funds.

Exchanges Try to Help

The Coinbase exchange has already tried to mediate such situations by allowing access to someone’s coin stash provided the claimant produces a death certificate, and the will of the deceased crypto holder containing the relevant instructions.

No doubt this could prove a useful service for people in times of need, but it also blurs the line of decentralization which separates cryptocurrency from typical financial services.

Conclusion

There are tons of ways to ensure your crypto reaches the hands of your loved ones in the event of your death, but each of them are fraught with obstacles and downsides which make them unsuitable for a variety of reasons.

At the end of the day, a good old fashioned bank vault containing a hardware wallet and private key would be enough to ward off all but the most extreme catastrophes, but even then you must entrust your details to third parties whom you don’t really know enough to be able trust fully.

No doubt the issue of cryptocurrency inheritance will explode one day, perhaps when a Winklevoss-type dies and the media furor over the inheritance dispute is loud enough to grab people’s attention.

Until then, it seems like dealing with your cryptocurrency in death may be just as tricky as dealing with it while you’re here.