As consumers build their wealth, assets are usually tangible: cash, investment, property, cars, jewelry, art. But increasingly we are adding a new type of asset to the mix: digital assets, be it in the form of cryptocurrency or a new asset class, NXT.
We are undergoing the largest wealth transfer in history right now, with an estimated $ 16 trillion expected to change hands in the coming decades. While it is easy to hand over the reins of physical assets in the event of an emergency or death, it is not as easy with digital assets.
A new Angus Reid study commissioned by Canadian Online finds Willful finding that only one in four consumers is someone in their life who knows all of their passwords and account details, which raises the question: Do consumers go through digital assets Will be prepared for, or will billions of goods get stuck in virtual goods?
While it is easy to hand over the reins of physical assets in the event of an emergency or death, it is not as easy with digital assets.
Digital assets continue to dominate the news cycle in 2021. While cryptocurrency is nothing new, it has received a lot of attention over the past year due to its skyrocketing prices, promotions from prominent celebrities such as billionaire Elon Musk, and offering bitcoins to traditional financial firms. Like Morgan Stanley. If you hold any type of cryptocurrency, the only way to access it is a private key – usually a 64-digit passcode. No private key, no access to virtual currency.
Many stories have been told about people buying bitcoins and would be millionaires today if they had not detected their hard drive or lost their keys. One high-profile case is that of Gerald Cotton, the founder of the cryptocurrency exchange Quadriga. When Cotton died in 2018, he took with him a private key of more than $ 250 million in clients’ assets.
Consumers have also been accompanied by stories about tokens of NXT, or non-fungi, digital assets hosted on the same blockchain that make cryptocurrency possible. For most, it seems absurd that artist Beeple could sell $ 69 million worth of art through a Christie’s auction, or that a virtual home in Toronto could sell for more than $ 600,000, or that people could make $ 200 million Over trading will shed light on virtual IBAs, such as the one we use. To trade baseball cards. But this new asset class is proving that physical assets can be as valuable if not more valuable than physical assets – and similar to cryptocurrencies, they require private keys to access.
When someone dies, they either have a will to decide how their property will be distributed, or if they die, a government source specifies how their property will be divided. However, it will underline what one should get, it usually does not have a list of up-to-date assets, nor does it include a password or access key. Today there are an estimated tens of billions of unclaimed property in banks today as a result of a family or executor who is not aware of those accounts after the death of a person.
But an executor can work hard to call financial institutions to see if that person has accounts and has access to the funds that are usually required to provide the will and / or copies of the death certificate it occurs. With digital assets, it is not as simple as calling a bank and finding a valuable NXT to a relative. There is no directory or central body that regulates NXT or cryptocurrency – it is intentionally decentralized, which is great for privacy but less than ideal for family members who want to know that someone has valuable digital assets. is.
And it’s not just about knowing digital assets – it’s about knowing about them. A recent study by the Angus Read Forum commissioned by Willful showed that consumers under 35 are less likely to have shared account access with loved ones (19% of 35 people have shared account information, over 55 Compared with 32% with people.) Is. It makes sense, the younger you are, the less likely you are to think of passing on the property after you die. But if something happens, this tech-savvy young demographic can leave their family.
So what can consumers do to ensure the security of their digital assets? First, consider using a password manager such as 1Password – which can store all your account information, logins, digital assets from personal assets and any other important information – and share the master access password with your executor Can do or store at will.
While it can ensure easy access to your accounts in an emergency, Lee Posenzer, the founder of Direction Communication Systems, says it can also put your family or executors at risk, indicating that in many cases, the website And app owners explicitly prohibit password sharing. In some jurisdictions their terms of service, and privacy laws, prohibit impersonation of account holders (in the US, which is covered by the Stored Communications and Electronic Communications Privacy Act) . Not to mention, accounts require fast two-factor authentication, which may not be easy to confirm that the executors do not have access to the person’s smartphone.
The platform of Directive Communication Systems helps manage the transfer of digital assets upon death, and Poscenzer says they do not collect passwords for this reason. Instead, they work with the property to provide content providers (Google, social media platforms, etc.) with the necessary documentation, which may include a death certificate, obituary, ID, or other documents. Upon meeting the requirements that change by company, content providers provide a data dump of the contents of an account from which they are available via the cloud.
Second, consider using a digital wallet or exchange to store your digital assets – if your family has access to it, it may also include access to your private key, depending on the features of the wallet, Or the exchange may have a death-management process. .
For example, Coinbase clearly outlines what an executor or family member can do to retrieve digital assets in case of death of the account holder. As a backup, you can store your private key on a physical piece of paper and make sure that it is stored in a secure deposit box, fireproof safe or other secure location where your executor will be near you. To reach the situation.
Third, create an up-to-date list of your assets that your executor and / or key family members have access to – this should include physical and digital assets, and should be reviewed and either annually or when you own one. Acquire new assets or change financial institutions. Finally, create a will that clearly outlines how you want to distribute your assets and provides specific instructions on how you want to distribute digital assets.
Not only is it a best practice to protect your property in any way and for minor children to play an important role like guardians, it will also be necessary to release any account content (for example, to Coinbase A copy of the will is required as part of its procedure for releasing funds for an asset).
As we go through this major money transfer between generations, it is likely that banks, fintechs, crypto exchanges, social media platforms, and other content providers will create clear death-management processes that allow people to know about digital assets before they die. Make it easy to alert and provide easy access instructions. But until this happens, following these steps means that you can be sure to let your assets go to the people or organizations you want – and that they won’t be stuck in digital purgatory.