Dead Wallets In Crypto: All You Need To Know
In the blockchain world, dead or inactive wallets are comparable to digital savings accounts that can never be re-accessed. In the little over ten years since the creation of the first Bitcoin, approximately 20% of all coins have become inaccessible.
These coins are in wallets that no one can open, which means they are gone for good. However, these wallets could have been re-accessed if their owners took the necessary precautions to prepare for the worst-case scenario.
Dead Wallets Explained
Inactive cryptocurrency wallets are crypto accounts whose holders accessed a long time ago. They still contain funds, but money needs to be added or taken out.
There are several reasons for this inactivity. Some people hold onto their tokens for the long term, waiting for the right time to sell, which could take years. Others couldn’t find their private keys to enable them to access their funds.
In some instances, these inactive wallets belong to deceased individuals. Such wallets are commonly available on blockchain platforms like Etherscan, but they are only accessible with private keys.
It is important not to confuse a dead wallet with burn or null addresses. By default, the latter are unreachable and serve as the blockchain’s virtual trash cans.
Cryptocurrency wallets use cryptography to safeguard digital assets. They have a private key, which is a permanent password. The private key comes with the wallet address during the creation of the wallet for the first time.
It’s usually a random string of characters and is the only way to verify ownership and unlock the wallet. Only the owner can access the funds in the wallet because of this encryption.
It is an essential system feature, but it only works while the cryptocurrency owner is alive. If they haven’t kept a private key somewhere safe, the coins will be locked in that wallet for eternity.
Accessing Crypto Assets Even After The Owner’s Death
In the ever-changing world of cryptocurrency, the concept of lost and inaccessible assets does not have to be a permanent problem. Even dormant digital treasures can become active again with careful planning and preparation.
However, the holder must have taken some necessary steps while alive to ensure their digital wealth remains accessible after their demise.
Consider the following recommendations below to safeguard your crypto assets:
Write Down Your Private Keys
It is critical to prepare for unexpected situations. So, write down login information and other important information in a secure, off-site location that will not be shared or leaked.
It is also advisable to inform your loved ones of this plan. You can leave hints or clues about where this valuable information is stored. Therefore, they can find and use it if the need arises. By taking these steps, you are leaving a digital legacy for your loved ones to benefit from.
Utilize Crypto Exchanges
Consider using a reputable cryptocurrency exchange, such as Binance or Coinbase, as they have specific policies for transferring assets after someone dies. However, you must be familiar with the platform’s policies.
More importantly, include a receiving address for your beneficiaries. Thus, you can ensure that your digital wealth does not vanish forever in this manner.
Use Decentralized Smart Contracts
Another unique approach is to use decentralized smart contracts. They can handle approvals independently and transfer your crypto assets to loved ones if you don’t use them for a set period.
This option provides a truly decentralized solution for moving your crypto assets. It further demonstrates blockchain technology’s remarkable capabilities.
Utilize Crypto Vaults
Another smart way to secure your digital assets is to use crypto vaults. Specialized vaults for digital assets have emerged as the number of crypto millionaires grows. These vaults add a layer of security to cryptocurrency wallets.
One unique feature about them is that withdrawals are not immediate. When you initiate a transfer, the transaction may take several days to be confirmed, allowing you to cancel it if necessary.
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