Death and cryptocurrency: what happens to someone's crypto when they die?

18 May, 2019
by Alberto Arnaldo
Death and cryptocurrency: what happens to someone's crypto when they die?

Even though most millennials, which are the dominating demographic in crypto, are still healthy and might not have ever thought of a last will and testament, if a cryptocurrency owner dies without passing along the keys to their assets, small fortunes might be lost. Past experiences appear to have triggered some partial solutions to the problem, but death and crypto still have certain issues to resolve. 

Having the keys to your crypto: a great power with great responsibilities

Keys are a foundational element of cryptocurrencies. Without public keys, cryptographic systems would be unable to locate other users on the blockchain, thus rendering themselves as addresses.

Private keys grant access to these addresses much in the way of a password, and the possession of the pair of keys offers significant advantages to traditional fiat counterparts such as PayPal or banks. The power and independence granted by being the sole person able to access funds is exponentially more settling than knowing that a bank, government, or private company can work against a person freezing their account or taking their capital against their will.

But a long time of expansion and adoption has made some elements of traditional finance unsurprisingly convenient. In the case of key ownership, although bank hotlines might be annoying to deal with, they eventually will help to reset a password. However, cases of people who held Bitcoin in private wallets and lost their keys have ended with notorious and unexpected solutions such as mass dumpster searches or even hypnosis experiments to try and remember the missing combination.

Death can be an expensive and hasty procedure to go through with a bank or a government, but there are mechanisms in place to deal with it. With cryptocurrencies, cases where assets were excluded from last wills and testaments and where no one but the deceased had access to the keys, which other than intentional situations might be commonplace in accidental or unexpected passings, have a pretty negative outlook.

The growth and development of custodial services might make death and crypto more manageable

It is widely assumed that most cryptocurrency investors and trading are holding most of their assets, if not all, in wallets offered by exchanges. That holds true at least for almost all small and mid-sized holders who are rather new to cryptocurrencies or who do not have the time or interest to deal with private wallets.

Even though a quick search revealed that out of the most relevant crypto exchanges only Coinbase has a detailed policy on what they can and cannot do in the case of the unplanned passing of a user, it would be reasonable to assume that any serious business would search for a solution in the case of a similar situation. Also, the lack of publicly available information might be related to an attempt to deterring scammers from attempting to impersonate the relatives of users. A Reddit thread points on that direction in a similar case which allegedly affected a Binance user:


The Coinbase policy for gaining access to the account of a deceased family member is clearly listed on one of the support tabs of the exchange, which has a “process to transfer the assets in the easiest manner possible” in place and requires the following documents from the relatives:

1. Death Certificate

2. Last Will and Testament - AND/OR - Probate Documents (either Probate, Letters Testamentary, Letters of Administration, Affidavit for Collection or Small Estate Affidavit)

3. Current, valid government-issued photo identification of the person(s) named in the Letters Issued

4. A letter signed by the person(s) named in the Probate Documents instructing Coinbase on what to do with the balance of the Coinbase account

Interestingly, the second point of the documentation evidences that it is indeed possible to recover the tokens belonging to a relative even without a last will, as the and/or conditioning suggests.

Quadriga CX and Gerald Cotten´s death: a perfect picture of everything that could go wrong regarding custodial services and death

When the Canadian exchange Quadriga CX announced the death of their founder and CEO Gerald Cotten back in January of this year, few users could imagine what was about to happen. Just in two weeks since the first news broke out, total chaos ensued as it became publicly known that the allegedly dead Cotten was the only person with access to the keys that locked about $200 million in customer´s funds.

Whether if the story put forward by the administrators of Quadriga is true or not remains to be seen, in light of the multiple doubts concerning the circumstances of the passing and the movements of funds registered at the exchange.

Regardless, an important lesson was learned about how custodial services can have serious disadvantages as well. Centralization brings with it certain weaknesses which can be exacerbated by poor management skills, such as the lack of a multisignature scheme which enabled more trusted parties to access the funds of thousands of customers.

The voice of the people: what does Reddit says about cryptocurrencies and death?

Only a couple weeks ago, a Reddit user asked themselves a similar question to the one which this article tries to solve. Plenty of different solutions to circumvent the caveats posed by death to crypto holders were offered, with some of the most significant ones collected here:





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