This subject may not be pleasant, but it is important to plan for all possibilities when investing in crypto.
According to Glassnode data, it is estimated that more than 10% of the circulating supply of Bitcoin (BTC) is lost forever, and it is impossible to know exactly how the crypto disappears after a person dies.
Therefore, before looking at the must-know steps to properly protect assets, you need to first understand the important security trade-off of telling a trusted person where and how to access your cryptocurrency.
Even choosing the right person to give your crypto assets to is much more complex because it's not just about trust, but how tech savvy someone is.
For example, Bob has 5 Bitcoins (BTC) that he wants to leave to his wife Alice if she dies. However, Alice does not know how to use a hardware wallet or exchange.
Therefore, Alice needs to find someone else to help her access the funds or learn how to use these platforms and devices, but both methods have their own security risks, such as sending crypto to the wrong address, being locked out of the device or withdrawing assets using standards wrong token.
Tether (USDT) is an example of a crypto asset that has three different token variations, namely OMNI, ERC-20 and TRC-20, including depending on the blockchain on which the token is issued. With this, sending one of those tokens to another will result in the coin being lost forever.
For example, OMNI-based USDT coins sent to ERC-20 wallet addresses will not be recoverable.
What steps should all crypto users take after choosing someone as a beneficiary of your crypto fund?
Location of your funds
The first information that should be included in the instructions is where to find your assets.
Including specifying the physical location of hardware wallet owned as well as hot wallet crypto storage.
If assets are placed in multiple places such as decentralized finance (DeFi), centralized exchanges and non-fungible tokens (NFT), the best idea is to combine them into a crypto wallet that supports multiple types of assets.
Metamask is one example of a service that allows the storage of fungible tokens and non-fungible tokens in one easily accessible wallet.
Password, private key and backup code
You need to carefully list all passwords, private keys, crypto wallet seed phrases, email accounts and exchange accounts required for accessing funds.
If turning on two-factor authentication (2FA), you also need to provide a location, password or list of 2FA backup codes for the application.
If the account is set up to receive SMS security messages, you should enter relevant details such as your mobile phone location and password.
Technical advice
Provide guidance on the best exchange to use or outline a brief guide on how to set up your own wallet and transfer the funds.
Update instructions from time to time if a certain platform experiences some security breach that requires you to transfer funds to a new wallet.
How to copy your crypto confidential information
The details should be copied on paper and copied several times including each copy being kept in a different location.
If only a copy of the paper is kept on the bedside table and the house burns down, the recipient will not be able to access the funds.
To maximize the level of security, there are companies such as Cryptotag, Cryptosteel and Crypto Key Stack that provide kits to store seed phrases and slogans on metal plates specially designed for your recovery phrase.
This provides additional protection against problems such as house fires, water damage and others that can damage paper copies.
