What Happens to Cryptocurrencies When You Die?

Blockchain removes intermediaries from transactions. For the most part that’s a good thing – but it can also have unintended consequences. For example, cryptocurrencies like Bitcoin flow between people much like paper money would be handed over. No financial institution is involved in the transaction. The same is true for other assets being tracked by blockchain technology, such as corporate shares.

When someone dies or becomes incapacitated, trustees or attorneys typically get control of that person’s assets through the intermediary. For example, if a trustee knows that the person has a bank account at bank X, they merely contact the bank, prove they have authority, and the bank co-operates to transfer the assets.

If a trustee wants access to social media and other online accounts such as email, they need to have the person’s logon credentials. Some social media platforms have procedures in place to allow trustee access through authentication processes designed for that situation much like traditional assets.

But what happens if a person dies or becomes incapacitated owning Bitcoin or other assets tracked by blockchain? Some people use third party wallet and exchange services to track their cryptocurrency, which may offer a solution for a trustee. But not everyone uses those, and there may be no intermediary to contact. If the person used a pseudonym for their credentials, it would make it even more difficult to prove who owned the account.

There have been stories about people who have lost their bitcoin private keys and have been unable to access their own money. A trustee would be in the same position if they don’t have the person’s private key. Potentially huge amounts of money or assets could be unrecoverable.

Blockchain and cryptocurrency holders might want to store their logon credentials and private keys in a safe place and let a family member know where it is. Or they might keep these credentials and private keys in a password manager, store the access details somewhere, and let a family member know where to find that.

Does blockchain itself perhaps provide a solution to this? Smart contracts execute automatically based on the happening of an event. Such as a market price threshold or temperature. Is there a smart contract solution that transfers access to cryptocurrency or other blockchain tracked assets of a person based on proof of a trustee or attorney’s authority to act? What would that proof look like? It is not, after all, a simple objective event such as a market price threshold.


  1. Excellent questions and good practical suggestions. The question of fiduciary access to digital assets has been canvassed here before. That question always assumed the presence of a digital intermediary like a custodian or service provider.

    Obviously the blockchain is not one of those.

    People may have other digital assets without an obvious or findable intermediary. We are going to have to get used to keeping a secure and up-to-date list somewhere of our assets and access instructions, unless we are happy to have our digital assets die with us.

    The effort of thinking up a “smart contract” instruction for the blockchain would be worthwhile (compared to the simplicity of writing down one’s access credentials) only if one wanted to transmit the digital assets to a beneficiary without visibility to taxing authorities.

    As it happens, invisibility to taxing authorities is often considered an advantage to users of cryptocurrencies, so maybe there will be a market for such an app. Proof of death for that purpose should not be much harder than proof of other triggers for which smart contracts are said to be used.

  2. There are certainly some intermediaries out there, such as Coinbase, who have been used to get to the assets of deceased holders.
    There are also outfits out there like https://thirdkey.solutions/ who are estate plan and executor consultants specializing in crypto assets. One of the folks at that firm wrote this: https://medium.com/@pamelawjd/letter-to-loved-ones-a-template-for-your-crypto-estate-planning-4ee0975434e4
    In the future, it looks like third generation blockchain solutions will hold the answer to issues like this. I’m thinking of platforms built on blockchain like EOS, Cardano and Neo. At least one of these contemplates stolen key recovery procedures through the use of account recovery partners.
    For those who keep the majority of their holdings on hardware wallets, one option would be to write half the seed phrase down on a piece of paper to be kept with the paper will, then if you’re a gmail user turn on the inactive account manager and add a few trusted persons to be notified in case you cease being active for 3 months. For each one, set a notification message that contains the remaining seed words.