If you invested in cryptocurrency, what would happen when you died?
Cryptovest explored this issue in an article this week, a topic that is bound to become more relevant in the years to come. A cryptocurrency is a decentralised digital cash system or virtual currency. The best known example is Bitcoin, which was invented in 2008.
To realise digital cash, a payment network is needed (accounts, balances, transactions etc), but payment networks have to solve the problem of double spending, i.e. one entity can’t spend the same amount twice. A central server usually keeps the balance. Cryptocurrencies achieve consensus without a central authority.
To verify the value of a cryptocurrency, a miner must confirm transactions, which is where the Cryptovest story comes in. Matthew Moody was a 26-year-old early miner in Bitcoin. Miners process transactions, secure the network and keep everyone in the system working together. Miners use software and hardware and they earn transaction fees. Confirmed transactions form a record—the Blockchain.
Matthew was killed in a plane crash in 2013. His father Michael knew his son was mining Bitcoin using his home computer, but he had no idea how much Matthew had mined or how to locate the currency.
When Matthew died, Bitcoin was valued at under $100, but now it is trading above $8,800 apiece although it peaked at $19,000 in mid-December.
The cryptocurrency industry is unregulated because to its decentralised nature. This has made it almost impossible for Michael Moody to recover information about his son’s Bitcoin holdings. He can’t access his son’s identity information. Matthew Moody might have possessed a small fortune.
Danny Curran, Finders International founder and managing director, said: “We’re only beginning to realise the impact cryptocurrencies will have on people’s wealth and estates in the future. Governments are increasingly trying to move people towards centralised digital systems, and more people and businesses will themselves use decentralised methods to pay, invest and more.
“As the case above proves, though, working out people’s assets when it comes to cryptocurrencies is a complex one. It’ll be interesting to see how this plays out. The advice that people should make wills relating to their digital accounts is well-known, but what people might also need to do is leave information about their online wallets.”
Finders International offers Landmark’s Financial Asset Search (FAS) for probate professionals, a thorough investigation of all UK asset sources. Overseas asset repatriation can also be arranged. Email us on [email protected] to find out more.