This Canadian Thanksgiving, one of my relatives asked me an odd yet interesting question — what happens to your Bitcoin when you die? Do you inherit it, or is it lost to the Ether (haha, I know) forever?
At the time, I didn’t have an answer. Knowing my own security protocols for my cryptocurrency, my untimely death would leave my family without access to the limited holdings I have. I can assume it’s likely much the same for readers of this article, who presumably use Ledgers and Trezors to keep their digital assets safe from any attacker.
However, a prominent Bitcoin startup is looking to aid this dilemma, which they called “one of the biggest unsolved problems in Bitcoin.”
Meet Casa Covenant
Bitcoin has forever revolutionized how your money works. It is the first technology that allows one to “become their own bank”, meaning that consumers can be responsible for their financial sovereignty, not a third-party like banks that are inherently susceptible to financial collapse, corruption, and so on and so forth.
While this “be your own bank” characteristic of Bitcoin has its benefits for sure (just look to Cyprus earlier this decade or Hong Kong now), there is a problem: inheritance. As outlined earlier, most cryptocurrency security systems today disallow or disincentivize inheritance solutions, as they pose extra risks to the safety of your coin.
On Wednesday, cryptocurrency hardware and services provider Casa revealed the fittingly-named “Casa Covenant” to tackle the pressing question of what happens to your precious Bitcoin when you pass on.
This system, put simply, “allows you to securely pass on your bitcoin to whomever you designate, while minimizing the risk that someone can steal these funds in advance of your death.”
Announcing Casa Covenant!
A Bitcoin Inheritance Service that solves the question:
“What happens to my bitcoin when I die?”https://t.co/NtLuD9sy4P
— Casa [Jan/3➞₿🔑∎] (@CasaHODL) October 16, 2019
According to a blog post outlining this solution, Covenant will use multi-signature technology, which will add a key to Casa’s existing 3-of-5 Key Shield product to make it a 3-of-6 setup. “This [additional] key is activated after clients start the inheritance planning process with Casa, and it’s held by a client’s estate lawyer,” the post explained.
When a client passes away, the Estate lawyer Key, Casa’s Recovery Key, and a Safety Deposit Box Key can be accessed (after the proper legal steps), thus allowing for transactions to be sent.
In other words, this system only works if there is valid proof of a client’s death, if the proper legal requirements are followed, and if the correct individuals have knowledge of Casa Covenant.
A Very Pertinent Solution
The release of this solution comes after a series of high-profile crypto deaths that left lots of cryptocurrencies unaccounted for.
The most notable of these is the case of QuadrigaCX, once Canada’s top Bitcoin exchange that folded in early-2019 after its chief executive purportedly suddenly died in India due to a disease.
While the details of the case are still widely contested — more information is released on the matter every week or two as the case is ongoing — it is known that the death of CEO Gerald Cotten left users without access to their Bitcoin, Ethereum, and so on. Cotten died with the private keys to his exchange’s funds on his laptop, which only he has access to.
Some reports say the cryptocurrency affected is valued at $150 million; others say less than $10 million. Regardless, QuadrigaCX’s unfortunate collapse goes to show inheritance solutions are needed for Bitcoin, especially to ensure that more conservative investors feel comfortable throwing thousands at this space.