The Mystery of the Missing Cryptocurrency Owners: Are They Dead?
Cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. It has gained immense popularity in recent years due to its decentralised nature and inherent security aspects.
However, unlike traditional banking systems, cryptocurrencies are not regulated by governments or central banks. As a result, they are susceptible to fraud, cyber-attacks, and even hacking. Recently, there were numerous reports of missing cryptocurrency owners who seemingly vanished without a trace. This raises a question: Are they dead?
Cryptocurrency and its unique challenges
As mentioned earlier, cryptocurrencies are decentralised and lack regulation. They are stored in digital wallets that are accessible only through private keys, which can be lost or stolen. Moreover, cryptocurrencies are not insured by any organization, and once lost, they are lost forever.
Unlike traditional financial institutions, there is no way to recover cryptocurrency lost to a scam or a hack. This, in turn, raises a pertinent question – if a cryptocurrency owner disappears, what happens to their digital coins?
Case Studies of Missing Cryptocurrency Owners
QuadrigaCX, a Canada-based cryptocurrency exchange, went bankrupt in early 2019 after its founder and CEO, Gerard Cotten, died in India due to complications from Crohn’s disease. He reportedly held the private keys to his company’s ‘cold wallet’, where all the funds were stored. The cold wallet, containing approximately $190 million, was inaccessible, and nobody knew the password.
In 2020, the founder of South African cryptocurrency exchange, Africrypt, disappeared with approximately $3.6 billion worth of Bitcoin. The owner and his brother supposedly went into hiding with the private keys to the cryptocurrency wallets.
These cases highlight the unique challenges associated with cryptocurrencies. Once the private keys are lost or stolen, the funds inside the wallet are inaccessible, and there is no way to recover them.
What Happens to Cryptocurrency When the Owner Dies?
Another interesting question is what happens to cryptocurrency when the owner dies without disclosing the private keys or password. Cryptocurrencies are not covered under traditional inheritance laws, and, unfortunately, there is no clear guidance or legal framework regarding the transfer of cryptocurrency after death.
Some countries or states have started recognising cryptocurrencies as digital assets, and they can be transferred as part of one’s estate. However, this is not yet accepted on a global scale, and many countries still lack proper regulations or guidelines.
Conclusion
Cryptocurrencies have become the go-to asset class for tech enthusiasts and investors worldwide. However, the recent incidents of missing cryptocurrency owners present a unique challenge. The decentralised, unregulated nature of cryptocurrencies provides immense benefits but also exposes them to various risks. The lack of regulations and the absence of clear legal guidelines on inheritance and asset transfers further complicates matters.
Therefore, it is crucial that cryptocurrency holders take proper care of their digital assets, including backing up their private keys, using cold wallets, and following essential digital security practices. Moreover, it is essential that countries and regulators worldwide come together to provide a legal framework that offers clarity and protection to cryptocurrency owners and their heirs.
