Cryptocurrencies are electronic peer-to-peer currencies that use cryptography and Blockchain or Directed Acyclic Graph (‘DAG’) technology to secure, record and verify transactions. As a digital currency, they transact through digital mediums of exchange, meaning that there is no physical note or coin. As at this date, there are well over 1500 different cryptocurrencies circulating in the market, with more coming out each day as the technology becomes easier to use and adopt for business owners, entrepreneurs and enterprise. In terms of value, the total cryptocurrency market capitalisation is around $300 billion USD, falling from a high of around $700 billion USD in January of 2018. The most notable cryptocurrency is Bitcoin, which is valued at $121 billion representing roughly 40% of the total market capitalisation of the space. Bitcoin is the original cryptocurrency that was released as an open-source software in 2009, it is essentially a protocol that enables users to make peer-to-peer transactions without the need of a central authority to verify transactions. As the original cryptocurrency with the most liquidity, it is commonly held as a store of value, like a digital version of gold. Other top currencies with multi-billion dollar valuations include Ethereum, Litecoin, Ripple, Bitcoin Cash and EOS.
Cryptocurrencies and Estate Planning
The rise in popularity of cryptocurrencies as digital assets has started to permeate over into the world of wills & estate planning. An example of this rapid growth can be signified by the substantial increase in testator’s looking to leave digital assets in their will’s, for their beneficiaries. If you are a testator holding crypto assets with the intention of passing them on, it would be prudent to carefully consider the process in which your executor will distribute them after your death. Firstly, it is paramount for the executor to know exactly how to access a testator’s digital wallet. Generally, this process is facilitated by the testator providing a memorandum containing relevant information such as the two-tier passwords to the respective external drive wallet that the crypto is held on. In order to ensure that your cryptocurrencies are swiftly and safely transferred to your desired beneficiaries, you may need to choose an executor who is highly familiar with this kind of technology. This would likely expedite the process as the executor would be able to quickly identify and understand the transactional nuances of cryptocurrencies in wills and estate planning.
Start Planning Now
It is vital for testator’s and future testator’s to fully understand that there is a legitimate risk that their digital assets will be stuck in limbo if they pass away without leaving clear instructions regarding their private keys and subsequent distribution. As such, we urge those looking to gain a greater understanding of estate planning and cryptocurrencies to contact one of our experts today.