Cryptocurrency is digital money that is stored in a virtual wallet and uses encryption techniques to generate currency and verify the transfer of funds. Want to learn more about what cryptocurrency is and how it can impact future inheritances? Read our previous blog post which goes into detail about the digital currency.
Cryptocurrency is once again in the spotlight after this latest security blow hit the headlines. One of the world’s largest digital coin exchanges, Binance, admitted that hackers had stolen over £30million in Bitcoin. They took 7,000 Bitcoin after hacking accounts using stolen user data. The hackers were even able to break through two-factor authentication passwords.
Chief Executive of Binance, Changpeng Zhao, said: “The hackers had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time". Zhao added: "The transaction is structured in a way that passed our existing security checks”.
This latest news story raises more questions about the safety of digital currency, such as Bitcoin. This is certainly not the first time that concerns about cryptocurrency have arisen. In 2014, Bitcoin exchange Mt Gox was hacked and bankrupted after $460million worth of Bitcoin was stolen. Earlier this year, cryptocurrency exchange platform, QuadrigaCX, hit the headlines after their CEO died unexpectedly with sole access to the digital wallets containing £105million.
Additionally, according to US cyber security firm, CipherTrace, the amount of cryptocurrency stolen from exchanges, which equated to $950million in 2018, is up by nearly 260% from the previous year.
In addition to the worries over the safety of cryptocurrency, there are concerns about how cryptocurrency is dealt with after death. Read on to find out more about the precautions that can be made to ensure cryptocurrency can be dealt with as part of a deceased person’s estate.
The importance of making plans for your digital legacy
Someone’s digital legacy is often formed by the information that they leave online including any website or blog listings about the person, social media profiles, photos, videos, gaming profiles and interactions they have had online. Digital assets make up a digital legacy and are possessions that are purchased, stored or available on digital devices or online services.
Cryptocurrency is a digital asset that forms part of a deceased person’s estate. The challenge cryptocurrency presents is there’s no way of knowing if someone owns it so it’s important to take the necessary steps to ensure the value of this digital currency forms part of the estate. Owners of cryptocurrency should inform someone, perhaps a Digital Executor, about the cryptocurrency and leave the Private Key details to a Digital Executor. If the existence or Private Key of the cryptocurrency wallet is unknown, there is no way of accessing the wealth inside.
With the rise in digital assets such as cryptocurrency and the popularity of online profiles, it’s now important for people to make plans about what happens to their digital legacy when they die.
Regardless of wealth, age or health, writing a Will can ensure that an estate, including any cryptocurrency, is distributed as per the individual’s wishes.
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