What would I do with Bitcoin in my will?

[Leo]

Well, like i said before, there is none, until someone very smart figures it out!

As jman0war points to above, providing a systematic means of transferring ownership of anything secured by an individual's private key opens the whole system up to attack. Bitcoin by design deliberately excludes external trust authorities, there is no record of ownership, let alone a means of contacting owners to validate any transfer is legitimate would leave it wide open. Providing a systematic approach would require an overhaul of how bitcoin works that would be strongly resisted.

The FADAA legislation in the US provides a framework for the transfer of digital assets on death, and sets out the level of detail and proof an executor needs to provide in order to take over ownership of these assets, but such a system only works where the current holder of the assets have verified the identity of the original owner. Bitcoin offers relative anonymity, and no such identity verification. Some of the wallet providers will transfer ownership of assets they are holding under the above legislation in certain circumstances, but they will not publicly release details of the mechanism for fear that it will be exploited.

With the current cryptography tools you could split your keys, encrypt them further, store parts in a safe deposit box or a lawyer or whatever you want.
You can keep enough to be able to access the bitcoins yourself, and require every one of the other parts to work together to access them without you.

So you're back to just passing on your private key, which is a very different proposal from a systematic solution implemented in code. There are many existing methods to do just that, each with their own issues. If you go down the key-splitting route, make sure there are fail-safes built-in to your approach, with no one individual the sole holder of one piece of the puzzle. A chain such as that just requires a single failed link to render the key unrecoverable. Even an article on bitcoin.com suggests the best way to bequeath bitcoin is to write down all the information, including your credentials!

 

[fpalb]

So you're back to just passing on your private key, which is a very different proposal from a systematic solution implemented in code. There are many existing methods to do just that, each with their own issues. If you go down the key-splitting route, make sure there are fail-safes built-in to your approach, with no one individual the sole holder of one piece of the puzzle. A chain such as that just requires a single failed link to render the key unrecoverable.

Just to be clear though, if you're using a multi-sig wallet (as opposed to splitting a single key among different people) you CAN afford to lose some of the keys, the exact number depending on how you've set up the wallet.

 

[Leo]

Just to be clear though, if you're using a multi-sig wallet (as opposed to splitting a single key among different people) you CAN afford to lose some of the keys, the exact number depending on how you've set up the wallet.

Good point. Different to splitting the key, but a better solution.

 

[ant dee]

Allright, lets just forget about my imaginary-brilliant-code.

We are back to custodial services.
Coinbase says on their website that all crypto-assets are insured.

So, in theory, if Coinbase_Wills was launched, insured by AXA would we not have a decent product?
Insurance companies insure each other correct? So even if AXA went bust, other insurance companies would step in to honour the claims?

 

[Leo]

Coinbase already provide a mechanism for the transfer of wallets they hold on proof of death of the original owner and on provision of the necessary probate documentation. Their are likely easier for a US resident to meet, but shouldn't be insurmountable for people outside that market. The challenge is really related to bitcoin held privately outside of an exchange.

 

[ant dee]

And what a challenge it is.
Let us define it.
Feel free to help defining the challenge.

Btc_guy wants to:

1. hold bitcoin privately, outside any custodial services. Keep total control of the keys to himself.
2. make sure his next-of-kin gets control of his bitcoin when (and only when!) he kicks the bucket.
3. make sure he can get help accessing his bitcoin in case of memory loss.

He can't have it all can he?
Unless he gives control of his assets to the government (who ultimately control all our assets) how can he expect to have the government protect his assets from his evil next-of-kin and his corrupt estate lawyer?

He can give custody to a properly regulated and insured institution (assuming there is one). Then he can enjoy the same peace of mind other people with wills do.

He can make use of a multisig wallet, keep enough keys to have access for himself and distribute extra keys to trusted parties, his next of kin, his estate lawyer.
How many keys? No simple answer to that, he has to weigh the pros and cons.

There is also the option to use further encryption and/or safe deposit boxes. Grant access to a trusted person only after death. Though we are now starting to slide more back to the custodial territory.

 

[Leo]

Let us define it.

And that's a great idea, would make a great Key Post. We can trash it out here and perhaps get a few more to contribute ideas on the best strategy for the various use cases and then move the result to a new thread. There are likely a good few reading these threads that may be holding significant assets they need to plan for.