“Jerry, Jerry!” Kramer screams manically as he barges in through the door. “I need you to drive me to Jackie Chiles’ office so I can draft a will.

“What’s this all about?” Jerry asked, furrowing his brow, while the laugh track played in the background.

“If I get hit by a car or have a heart attack, all  my Bitcoin is gone. Gone, Jerry gone!” Kramer explained. “I need to make sure my future heirs have access to my Bitcoin wallet.”

While this hypothetical scenario fits into a classic situational comedy setup, it also raises valid points about cryptocurrency ownership and inheritance. In most situations, if someone dies without having a proper will in place, the estate is distributed to their spouse and next-of-kin. But this doesn’t always work with cryptocurrency, partly because only you are likely to have access to the private keys required for access.

In addition, a cryptocurrency or blockchain address doesn’t tell anyone whether the wallet is stored on a USB drive, a hard-drive or a specific kind of external wallet. Since these addresses do not store any biographical information, no one can access your cryptocurrency if you pass away suddenly. They might not even know it exists in these circumstances. Even if they are stored somewhere, the hardware on a computer or other device can fail: The chances go up every year they sit in storage.

All the while, there is no way to differentiate an inactive account from an account that’s been lost to the annals of time and history, which leads to artificial inflation in supply. If access is lost to a few Bitcoin here or there, it has a small impact, but the reality is anywhere between 2.78 and 3.79 million Bitcoins may already be lost forever. This is a substantial chunk of the 21 million that will ever be minted, and the amount of lost Bitcoin will only continue to increase.


No Keys, No Crypto

– As mentioned previously

Centralized Crypto Services

What if Someone Else Dies and Loses Your Keys?

When Gerald Cotten, the owner of Canada’s then-largest cryptocurrency exchange, “passed away” in 2018, more than $250 million in his customer’s assets were gone. Cotten was believed to be the only person with the private keys to access the money, meaning it is gone forever. There is no authority over the blockchain to determine where these assets are stored and return them to the rightful owners.

It isn’t easy to assess how safe, centralized exchanges and crypto banks are, even in 2022. Take Celsius, for example, which recently lost more than $50 million in Wrapped Bitcoin when an employee (presumably CEO Alex Mashinsky) used a third-party hot wallet called MetaMask to access BadgerDao hack. It is unclear how many other exchanges or services that generate high-yield returns also use poor security practices. For example, if client assets are loaded onto a hot wallet, and the person controlling that wallet passes suddenly, all those assets could also be lost.

What if You Die Suddenly, Before Explaining How Your Heirs Can Access Your Crypto?

Another famous case concerns Matthew Mellon, who died suddenly in April of 2018, but his estate struggled with paying off taxes and debts. Most of Mellon’s $200 million fortune was tied up in the cryptocurrency XRP. “One might think that a[n] … estate comprised 97% by a single asset would be a straightforward matter to administer,” the estate’s lawyers wrote in one court document. “This estate has been anything but straightforward.”

His will was outdated and did not mention anything about XRP. Reportedly, he hid the keys on other devices under other people’s names across the country. As the price of XRP continued to fluctuate, his family and estate ran the risk of losing millions. Unfortunately, Ripple also bound Mellon’s wallets with an agreement that prevented him from selling more than a small amount of XRP every day. It took years for the estate to pay off the taxes.

Death, Taxes and Policies

Depending on the policies of different centralized exchanges, such as Coinbase, there may be ways for an executor or family member to retrieve the digital assets. However, if you’re using cold storage, that isn’t much help for your loved ones and next-of-kin. They’ll need to access the cold storage wallets, or no one will get anything. Ever.

And all of this is going to take time. If these crypto-assets suddenly go up (or down), there is no way to liquidate them all immediately. Of course, that is, if the estate does not want to leave those holdings in cryptocurrency.

But depending on the Terms of Services and the Privacy Policies of password managers and different platforms, nor would it be possible to unlock accounts with a two-factor authentication setup if you don’t have access to the person’s smartphone or authorization apps.

Consider some edge cases and possibilities: laws and regulations are bound to change in the near term. Exchanges that are built on shaky footing might receive bans in certain jurisdictions. Binance is notorious for operating several shell companies to avoid taxes and regulations and is occasionally banned in certain jurisdictions. If you die with your crypto stored on Binance. Then your state or province bans its operation – it may be substantially more difficult for your will’s executors to access these funds a year or two in the future because the account will no longer be active.

Can New Security Protocols Solve this Problem?

Shamir Security

On Trezor cold wallets and some other hot wallets, it is possible to split your private key into pieces that can be stored safely. The idea is that if you forget your password, you can reassemble the pieces from separate devices. It lets you store all your crypto on one device while allowing you to keep backups of your private key. But if something were to happen to you, you would need to leave and list the locations where the private key pieces are hidden.

Multi-Signature Protocols

The multi-signature approach works for fewer blockchains but is helpful for Bitcoin. The gist of it is that you store your crypto on multiple wallets, and all of them need to sign any specific transaction. If you store one wallet in a bank in one city, and another hidden somewhere across the country, near impossible possible for anyone to steal your crypto. Unfortunately, most exchanges and blockchains do not use multi-signature protocols.

Social Sharing Protocols

At the end of 2019, Vault12 rolled out a solution that allowed users to pay friends in ETH to protect their private keys. The Shamir’s Secret Sharing cryptographic protocol allows a user to select a group of “guardians” to possess parts of your seed phrase. If you lose the key, your guardians can combine theirs to allow you to recover the funds.

CEO Max Skibinksy explained:

“We provided this mechanism in the app that owners … add Ethereum to [their] Vault and this Ethereum will go in a smart contract that will monthly pay out guardians the price that the guardian set for their services, and this price will be visible to both [parties] when you set up the Vault.”

You can always swap guardians if you find that one of them is always unavailable or unreliable. However, it is inefficient because it would still be difficult for someone to log into their loved ones Vault12 account to initiate the process to access their funds.

For inheritance purposes, you would need to set up a Digital Inheritance vault to ensure an individual (executor or trustee) will access these assets. It may also require an expensive executor or trustee that understands the digital crypto space.

Again, please note that while smart contracts are code, it does not mean that they are secure or unhackable. It isn’t yet clear whether Vault12 or other companies will change the game.


A Limitation of Cryptocurrency?

There’s a legitimate criticism to be levelled against cryptocurrency, in part with the transition and tracking of assets. Cryptocurrencies haven’t yet completely decentralized (i.e. they have a few mining pools controlling most of validation, too few nodes, too many whales) and may need to rely on centralized legal and financial services to ensure the safe passage of assets.

You still are responsible for electing executors, writing a will, and ensuring that others can access your private keys. More than likely, you’ll also need to find and pay a lawyer to ensure the legitimacy of your estate. To ensure the longevity and circulation of these decentralized assets, it is still necessary to engage with centralized institutions which require Fiat payment.

Another risk is the volatility of assets in this space. The top 10 or 20 cryptocurrencies by market cap change every several months, projects die, and past performance is no indication of future success. The value of the cryptocurrency you may intend to leave your inheritors can quickly rise or fall. In many cases, your inheritors will also need to pay transaction fees to sell the currency or transfer it to other exchanges/wallets for withdrawal.


Planning Ahead

  • For all your digital assets, you need a list of all their locations and the ways they can be accessed.
  • Keep this information along with your keys in one (or ideally several) secure places.
  • Get an executor who can understand and delegate these assets
  • Specify who gets what in your will.
  • Ensure that this system allows your loved ones to quickly liquidate or divide the assets if necessary.


Reliance on a blockchain-based digital currency puts investors at risk: Without proper planning, their passing could result in all their cryptocurrency disappearing.

It is estimated that about 20 percent of all Bitcoin ever minted has already been lost. As people die or lose track of their belongings, their cryptocurrency can become inaccessible.

There is no central blockchain authority to track down a person’s loved ones and no way to pass out their inheritance.

In the cases of centralized exchanges with poor security practices, it puts your assets at risk. When QuadrigaCX founder Gerald Cotten died, he took the keys to more than $250 million in user assets with him. When Matthew Mellon died, there was no mention of his nearly $200 million in XRP in his will leading to a prolonged search to find his private keys. The estate struggled to pay taxes and debits and could not liquidate all the crypto quickly due to XRP policies.

While there are blockchain solutions for distributing your private keys to others, and electing an inheritor via Vault12, it is unclear how well this system holds up to legal scrutiny, especially in countries like Switzerland which have strict anti-money laundering laws affecting crypto wallets.

The best solution may be the simplest: it involves writing down all your assets’ location and private keys, storing them safely, and working with an executor to ensure their efficient passage to heirs or next-of-kin.

Be mindful that the value of this inheritance can fluctuate and may hinder paying off any debts or taxes that might be outstanding.