Rules on Bitcoin Inheritance Remain Elusive

The rules governing Bitcoin inheritance or cryptocurrencies in general remains elusive, and a solution might take a while to emerge.

The problem is illustrated by the case of Matthew Moody, one of the earliest Bitcoin miners. The 26-year-old died in a plane crash in August 2013 during an observational flight. Matthew’s father, Michael Moody, told Bloomberg he knew that his son was mining Bitcoins using his computer at home. However, the retired software engineer has no idea how many coins Matthew had mined and has no way of locating them. He has spent three years trying to find means of recovering those Bitcoins.

“He used his computer at home to mine Bitcoins when you actually could do it that way, and he had a few, we think.”

At the time of Matthew’s death, the value of Bitcoin was under $100. Today, it is trading above $8,800 apiece after peaking at more than $19,000 in mid-December.

No key, no Bitcoin

The decentralized nature of virtual currencies makes it impossible to completely regulate the industry, said Todd Kandaris of Stepwyze, a developer of decentralized blockchain software solutions.

This same decentralized system makes it difficult for Moody to recover information about his son’s Bitcoins. Without the latter’s online wallet, which is hosted by blockchain.info, Moody cannot access his son’s specific identifying information. It must also be frustrating that Moody cannot ascertain if his son had left him a few Bitcoins or a fortune as wallets contain an unlimited number of unique identifiers or addresses linked to each of the mined digital currency.

Nolan Bauerle, research director at CoinDesk, told Bloomberg “there is no authority that could be appealed to fix this. Those coins would be abandoned,” going on to explain that a dead person’s Bitcoin holdings would become inaccessible at the time of passing.

Perhaps as cryptocurrencies gain widespread adoption, holders of digital currencies would begin leaving information about their online wallet in their last will and testament to avoid issues like those experienced by the Moodys.