Like a lot of Americans, Sandy Carter has been getting into crypto. She’s already amassed an impressive assortment of cryptocurrency and NFTs, and she even has a Lazy Lion, an NFT illustration of a lion that’s probably worth at least a few thousand dollars on its own. It was only recently, however, that Carter realized she didn’t know what would happen to her small but growing crypto fortune if she unexpectedly died.
“How do you go about planning for that, because it’s on the blockchain and it’s immutable?” Carter, a former Amazon executive who recently joined a crypto startup, explained.
Carter’s not alone. If you don’t own cryptocurrency yourself, odds are you’re related to someone who does. Some 16 percent of US adults say they’ve used crypto, and it feels as though these digital assets are everywhere now, from Super Bowl ads to Bachelor contestants’ Instagram stories. Crypto is new and exciting, and people want to get in early on what’s supposed to be the next big investment trend. That means that things like Web3, NFTs, and decentralized autonomous organizations, or DAOs, are top of mind.
But new crypto investors aren’t necessarily thinking about what might happen to their digital assets in the event of an untimely death.
This is bad news for many because there aren’t currently established ways to ensure that crypto is passed on to the next of kin. Without a plan, crypto investors could die and leave their heirs locked out of a valuable source of financial support and no way to get it back. But even the crypto investors who are trying to plan ahead, along with a few crypto-minded tax lawyers and financial advisers, are running into logistical complications. Now they’re racing to figure out how to make inheritance work in the age of bitcoin — a morbid reminder that even as crypto enters the mainstream, it’s still very new.
The nature of cryptocurrency makes it complicated to pass down. Cryptocurrency is usually stored on the blockchain, a digital ledger that’s formed by a network of computers throughout the world that record transactions, including the exchange of cryptocurrency. People usually make these transactions by using public and private keys. Public keys work like bank account numbers, and serve as an address that you can use to send other people crypto. Private keys work like passwords, and are made of unique, extremely long strings of characters that unlock your crypto. Unlike other types of passwords, however, private crypto keys can’t be recovered once they’re lost or forgotten. That means that without those keys, people who are entitled to inherit their loved one’s crypto won’t be able to get it.