• February 29, 2024
 Digital asset inheritance: Addressing the key challenges

Digital asset inheritance: Addressing the key challenges

Digital asset inheritance is something that can be overlooked in our industry. It’s challenging to secure and pass on digital legacies to beneficiaries in a simple way. There are a few key points that I believe need addressing:

1) Whilst some of us are comfortable with the fantastic technologies that are MPC, hardware devices and multisig, most are not, adding to the risk that beneficiaries may not receive their part of a digital legacy.

2) Backups are challenging, but everyone should have these in place for recovery scenarios. There is a tradeoff between making recovery plans easy so that it is not arduous for beneficiaries to inherit their assets, and not so easy that these end up in the wrong hands. I think it’s a little unfair to expect lawyers to keep secure backups as there are serious repercussions should they be lost. One of the suggestions in the industry is to create multiple backups and use wallets requiring a threshold of signatures, but still, this is not super easy for the everyday user.

3) For executors, solicitors and estate admins responsible for distributing an estate, it’s risky and confusing to transact on-chain without any prior experience. Simple mistakes result in lost assets which cannot be recovered. From a liability standpoint, this is no doubt a concern for many.

It is worth noting that there are promising developments in social recovery for smart contract-enabled wallets.

With my background in probate insurance, I’ve grown to be interested in inheritance and what this may look like for digital assets. It’s a challenge that I wanted to solve, so we have been working hard to build a solution that makes it easy to pass on digital assets as physical bearer assets, without complex backups. With investor protection in mind, we went one step further and built a cold storage service that protects the assets with full liability coverage as the digital legacy is built up over time.

I’d love to talk to others with exposure to digital assets inheritance to hear what else is being developed in the industry and whether there is anything we are missing. Feel free to reach out if you’d like to talk and share your thoughts.

Solving the challenges of digital asset inheritance is something we need to get right.

Mark Titmarsh, Head of Digital Assets, Malca Amit