How Can Crypto Investors Pass Down Inheritance To Future Generations?

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Now a trillion dollar market, the crypto industry has been branded by some as the ‘wild west’ of the 21st century. While it may not be entirely true, this new asset class has undoubtedly earned a position as one of the most coveted markets in today’s global economy. According to a survey by PeW Research Center, about 16% of Americans have at one time invested in crypto assets such as Bitcoin and Ethereum. 

Despite the lucrative returns over the past few years, crypto is yet to mature to the level of traditional financial instruments. Most notably, there are no proper structures to pass down crypto assets to future generations. A majority of crypto holders have no clue what will happen to their assets in case of an untimely death. This should not be the case; like any other financial asset, the value of crypto holdings ought to be transferable across generations.  

So, what options do crypto investors have? Before diving deeper, it is worth noting that digital assets can be stored in a custodial or non-custodial wallet. The former is provided by centralized exchanges who also control the private keys. On the other hand, non-custodial wallets give users full control over their private keys; they come in various forms, including paper and hardware wallets. 

That said, most of the existing wallets in the market do not offer users an option to pass down their crypto wealth. The only way to do so is by sharing one’s private key with the intended heir, a model that has proven to be quite unreliable. For instance, an heir can easily forget or misplace a private key, making it hard for them to access their inheritance. 

The Issue of Crypto Inheritance 

Similar to the dot.com bubble, cryptocurrencies have given rise to a new era of millionaires who are in their 20s and 30s. But how exactly can this wealth be passed down to the upcoming generations? In the past, there have been cases where a ton worth of crypto assets has become inaccessible following the demise of an owner. 

The QuadrigaCX scandal is one of the few examples, where close to 1000 BTC remains locked after the exchange’s founder died, taking with him the private keys. Crypto media publication Decrypt also reported last year that the loss of private keys is one of the main contributors towards the reduction of Bitcoin’s circulating supply. 

What is the Solution? 

Given these scenarios, it is evidently important for stakeholders in the crypto industry to introduce proper inheritance structures. To this end, some crypto exchanges have come up with mechanisms that allow an heir to legally prove their relation to the deceased, after which they can access the funds. However, this is not favorable for the DeFi heads who prefer using non-custodial wallets. 

Thanks to the debut of Non-fungible tokens (NFTs) and decentralized identifiers (DIDs), it is now possible for crypto degens to pass down their coins through the Serenity Shield DApp. This decentralized platform features a fully encrypted ecosystem that allows crypto holders to create a secure ‘strongbox’ for inheritance purposes. Unlike the approach taken by centralized exchanges, the Serenity Shield strongbox is fully controlled by the creator. 

DeFi investors looking to secure their future generations can simply configure a strongbox on Serenity Shield, upon which the DApp will generate three unique NFT fragments (private keys). The first NFT remains in hands of the user, the second one is sent to the designated heir while the last NFT is secured in Serenity’s smart contract vault. To unlock the inheritance, an heir requires at least 2 out of the 3 keys. 

With the DeFi and NFT markets on the rise, it is a no-brainer that users need such DApps. This will not only make it easier to transfer crypto wealth but increase the value of digital assets. More importantly, decentralized crypto management platforms have no control over one’s private keys. It is like killing two birds with one stone; securing the future while staying loyal to the crypto ethos. 

Conclusion 

As we move to the next chapter of the crypto industry (being integrated with the larger financial ecosystem), it is fundamental for the players to adopt more sustainable ecosystems. Wealth is meant to be passed down; after all, that is why most people hustle so hard throughout their lives. This calls for innovators to focus on inheritance solutions that will ensure coins do not disappear into oblivion in the future.

Being an active participant in the Blockchain world, I always look forward to engage with opportunities where I could share my love towards digital transformation.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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