Over time, according to Chainalysis, 4 million Bitcoin (BTC) have disappeared, with 2.1 million now lost in inaccessible wallets. HODLers who have died without leaving access to their wallets to anyone else may have possessed many of those coins. Some people believe that Satoshi Nakamoto's estimated 1 million BTC fortune hasn't been touched because no one had access to the early mined blocks. If the same is true of other early Bitcoin investors, then a significant amount of BTC may be irrevocably lost.

While it's not possible to know exactly how many Bitcoins have been lost forever, Investopedia estimates that around 20% of all Bitcoin mined will never be used again. That's around 4 million BTC, worth over $140 billion at current prices.

The problem of crypto inheritance is compounded by the fact that most people are unaware of the need to plan for it. A recent survey found that only 8% of people who own crypto assets have made arrangements for what will happen to their holdings in the event of their death.

With the value of Bitcoin and other crypto assets continuing to rise, it's likely that more and more people will find themselves in the position of having valuable digital assets but no clear way to pass them on to their loved ones.

Crypto Inheritance Solutions Are Centralized

Users of centralized cryptocurrency exchanges do not have direct ownership of their funds. This is the foundation for today's adage, by Andreas Antonopoulos "not your keys, not your crypto." Users are forced to entrust their valuable digital assets to a central storage vendor in order to comply with one of the key principles of decentralized finance.

According to Law Insider, in order for a centralized entity to function, it must have control over the private keys associated with the accounts it manages. This is necessary in order to protect against theft and fraud, it also means that users of centralized exchanges do not have full control over their own funds.

Solutions to the Muddling Issue

One solution that has been proposed is to use a crypto inheritance service, a study conducted in 2020 by the Crenation Institute has notably found that nearly 90% of cryptocurrency owners are worried about their assets and what will happen to them once they no longer hold them physically.

In inheritance, things can get complicated - especially when digital assets are involved. In most cases, traditional inheritance is centralized: a single individual (usually a close relative) is named as the executor of the estate, and they are responsible for distributing the deceased's assets according to their wishes.

However, with digital assets - like cryptocurrency - things are often more complicated. This is because when crypto is decentralized, there is no single authority that can control or manage it.

Options Available for Inheritance

However, here are a few different options available for inheritance when it comes to crypto.

One option is to use a service like Coinbase's Vault, (recently invested $500M in their crypto portfolio) which allows one to set up an account that can only be accessed by multiple people (with the holder's permission). This would allow you to designate a few trusted individuals who could access your crypto after you die.

Another option is to use a smart contract, which according to data from IBM research are simply programs stored on a blockchain that run when predetermined conditions are met. With a smart contract, you can set up your crypto so that it automatically goes to the people you want it to go to after you die. This can be a good option if you don't want to rely on someone else to manage your inheritance for you.

You could simply give someone power of attorney over your crypto assets. This would allow them to manage your assets on your behalf, including distributing them after you pass away.

In this respect, several Web 3 platforms have come up to solve the issue of crypto inheritance and the security of digital assets. Serenity Shield is one such startup. Launched in 2021, the platform leverages its StrongBox product to allow crypto investors and holders to secure access to their wallets. Simply, by having a StrongBox, users can secure their passphrases, passwords, and any sensitive information that can be used to access their crypto, in case of sudden death.

The platform leverages NFTs and a 'multi-sig' wallet that is automatically activated if certain conditions set by the owner are met.

Ultimately, there is no single "best" way to handle crypto inheritance. The best solution for you will depend on your personal circumstances and preferences. No matter which option you choose, it's important to make sure that your wishes are clearly laid out and that the people you've chosen to manage your inheritance are aware of your wishes. Otherwise, there could be confusion and conflict down the road.

"There are so many bitcoin and crypto HODLers that feel they should hold for decades & even pass it as inheritance. Land or asset inheritance is not a taxable event, but crypto inheritance is," says Sathvik Vishwanath, the CEO of Unocoin.

Where Serenity Shield Comes In

The Serenity Shield Project was formed in 2021 after it was recognized that a large, yet unresolved, the problem existed in the worldwide cryptocurrency market for secure wallet access and ownership transfer.

Serenity Shield, a digital asset privacy protection specialist, aims to provide an encrypted and completely decentralized way of passing on assets to a beneficiary in the event of personal tragedy or unintentional death. Our users will be able to reclaim full ownership and control over their digital belongings, while also providing an additional sense of security by utilizing this innovative technology.

Moreover, Serenity Shield has joined forces with the Singapore-based Digital Insights Ventures (DIV), according to a press release shared with Bitcoinist. Per the strategic partnership, DIV will support Serenity Shield in its future fundraisings, will increase and enhance the offering of their non-custodial passkey security solution.

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This collaboration that includes economic, marketing and commercial components will be publicly announced on August 2, 2022, according to the press release. 

Crypto inheritance gets decentralized with this new solution which has also been created to allow people to securely store their crypto wallets and private keys in a decentralized manner, meaning that if they were to die, their assets could still be passed on to their loved ones.

Overall, how crypto HODLers go about their will has to differ from person to person. Some people may wish to store their assets themselves and create their own inheritance solutions, while others may want to entrust institutions with their funds and wills.