What Happens When Crypto Millionaires Die?30th May 2019
Q U E S T I O N
What happens to digital heritage?
The case of the deceased crypto-millionaire Matthew Mellon occupies the media and raises a question that many only ask themselves when it is too late: What happens to the digital heritage when crypto-investors pass away?
The Matthew Mellon Case
Matthew Mellon had made a lot of money with cryptocurrencies. With a fortune that, according to Forbes, amounted to over a billion US dollars at the beginning of the year, one can call him a crypto-millionaire without exaggeration. He had earned the money through an early investment in XRP, the currency of the Ripple crypto network.
As Forbes further reports, the investor was extremely cautious about his cryptographic assets. He is said to have had several wallets, each of which is protected by its own private key. These, in turn, are apparently stored on memory cards that are distributed under false names in bank lockers in the USA.
His family does not seem to know the whereabouts of the Private Keys either. If they cannot find a way to access the keys, the billions in cryptocurrency inheritance will be lost.
Safety first — How do you make Private Keys accessible to family members?
The issue of inviolable crypto assets is not entirely new. Just recently, Base58 reported a high number of lost Bitcoin investments due to the loss of Private Keys. However, these are private keys that investors can no longer access themselves because they have not been stored or otherwise canceled. The consequence is simple: if you don’t have the right key, you can’t transfer money, the money is “frozen” on the blockchain.
In the case of inheritances, however, investors should consider as early as possible how their family members or any heirs can access the digital estate in the event of illness or death. There are various ways of doing this.
Crypto heritage and online wallets
In the case of online wallets, the situation is less critical. Since many of these wallets regard Bitcoin as pure book money, it is often sufficient for heirs or agents to be able to identify themselves as such to the operators.
Offline Wallets and Seeds
If you are one of those people who prefer to store their money on their own computer or in a local wallet, you can still make provisions. In this case, you should print out the so-called seeds of the wallet and attach them to the will, so those family members or other heirs are informed in the event of illness or death and thus have access.
Seeds are a series of words that can be used to restore the master key.
2/3 Multisignature Wallets
If you have a concrete trust in a person in your personal environment or a lawyer or notary whom you would like to enable to carry out transactions in an emergency, you can fall back on this method.
The 2/3 multi-signature method means that there are a total of three keys and payouts from such a wallet are only possible if two of the three keys have been signed.
The designated trusted third party receives the seed of the first key, the other two are kept by the investor himself. The seed of the second key is printed out and stored well. In the case of heirs, it could also be left in the will, so that survivors can access the seed.
With the second key alone no transaction can be carried out, the seed of the trusted person is additionally required in order to be able to dispose of the money.
Whichever method you choose is certain: If you want to prevent your own crypto assets from remaining on the blockchain in the event that you can no longer dispose of them yourself, you should take early precautions.
What Happens When Crypto Millionaires Die? was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.