The Signal: Living through a global pandemic forces us all to reckon with our own mortality. Social distance is getting in the way of people writing their wills, so “online will template” has joined the ranks of queries picking up steam in recent weeks. People want to ensure that their loved ones are taken care of and that their estates get passed on effectively.
Companies that provide cryptocurrency inheritance solutions have seen a surge in new sales as a result of the pandemic. We interviewed Nick Neuman, the CEO of Casa, a cryptocurrency custody startup. He says that Casa tripled sales of its “Diamond” product in the first 3 weeks of March compared to January and February combined. Diamond is the company’s premium offering, which gives clients access to Casa’s inheritance solution.
In addition, in Q1 the company has seen a 40% increase of the amount of cryptocurrency that clients are holding. Neuman says his team is bracing for an increase in new investors as more people start to use cryptocurrency as a hedge.
Digital estate planning — the process of making arrangements for what will happen to your digital assets after your death — is not new. There are plenty of solutions designed to help clients manage what will happen to their email, photos, files, books, songs, rewards, gaming accounts, social media, dating profiles, domain names, blogs, and other income-generating websites.
However, cryptocurrencies are unlike traditional assets in that they are self-sovereign by design. They don’t require, or in some cases allow for, an intermediary to supervise transfer of funds or ownership. The only way to access the funds in a crypto wallet is with a private key: a randomly-generated 64-character password known only by the wallet owner. There is no central control to call for help in the case of a lost private key.
Even if a crypto owner’s death has been validated with a death certificate, and a will or court order dictates that everything should be transferred to a living heir, it is simply impossible for those funds to be transferred without the private key.
This brings us to the dead man’s crypto conundrum: There is no way to ensure that your beneficiaries receive your crypto funds after you die without disclosing your private keys to a third-party institution or a trusted person before you die, thereby exposing your crypto to loss or theft.
It is estimated that approximately 4m bitcoin (~20% of total circulating supply) is lost forever either due to the owner passing away, or investors losing access to their private keys.
This conundrum has led to the rise of the cryptocurrency inheritance industry, and the infamy of its poster children:
- Gerald Cotten, CEO of crypto exchange Quadriga, passed away suddenly in 2018. He was the only person with access to $190m worth of funds belonging to Quadriga and more than 115k of its clients.
- When Matthew Mellon, a billionaire crypto investor, died in 2018, he left a will and his family was able to inherit his cash, real estate, and stocks — but not $500m worth of his crypto.
- Many people believe that the anonymous developer of bitcoin, Satoshi Nakamoto, has passed away, which would explain why there have been no transactions on his/her wallet since its inception. This would mean that the 980k bitcoin in the wallet, worth $7.6B today and $19.3B at its peak, is lost forever.
The opportunity: A study by McAfee in 2013 found that the average person worldwide valued their digital assets at over $35k. Since then, there’s been an explosion in the use of digital devices and software, not to mention cryptocurrency.
There are opportunities to provide services to clients, as well as their lawyers and their loved ones, in the crypto inheritance space and the digital estate-planning industry more generally.
Software solutions are the most popular, and have collectively raised over $16M. Companies like EverPlans, Cake, Legacy Concierge, Lexikin, Secure Safe, and Kinherit provide secure cloud storage, handover services, password management, and funeral and end-of-life planning, among other services.
In the crypto space, companies like TrustVerse, SafeHaven, and Casa leverage AI, blockchain, and encryption to provide inheritance solutions. Casa clients pay $420/month for their Diamond product which includes assistance and resources for their lawyer and family members.
Casa takes a high-touch approach to client service and even does an annual “practice run” with individual clients, their lawyers, and heirs where they walk through how the funds will be transferred in the event of the client’s death.
Hardware solutions apply specifically to the crypto space. Hardware wallets are password-protected devices that allow users to store their private keys offline, which makes them immune to hacking (and popular with crypto users):
- Ledger Nano ($59): 74k searches/month
- Trezor ($59): 74k searches/month
- KeepKey ($99): 2.6k searches/month
Source: Keywords Everywhere
Keevo is the first hardware wallet to provide a beneficiary service. Customers pay $615 for the wallet and service.
Online memorial sites are widely used by loved ones. In fact, more than 50% of respondents to a recent Digital Legacy Association survey said that they had posted memorial messages on someone’s Facebook profile after their death, and 20% had posted on a third-party memorial site such as Tributes ($50 /site), ForeverMissed (up to $95 /site), EverLoved (free) and MyKeeper (up to $75 /site).
Finally, there is an argument to be made that inheritance solutions that are only applicable to the crypto space (e.g., hardware wallets) will soon be more broadly applicable given the rise of the self-sovereign identity (SSI) movement. The SSI industry, driven by the idea that individuals should have complete ownership and control over their digital assets and information, is expected to reach revenue of $1.1B by 2024.
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