The concept of mortality is not one that many individuals like to contemplate, but it is a critical aspect to consider when it comes to estate planning. This is especially true for digital assets and cryptocurrency, as these assets require unique considerations and protections.
Fortunately, there are now decentralized finance (DeFi) solutions such as Safe Haven, Sarcophagus, and WalletPort that are specifically designed to keep digital assets safe and secure in both emergency and non-emergency situations. These service providers are working hard to ensure that users’ seed phrases and assets remain accessible, even if they forget or lose their wallet, or if it is compromised.
While self-custody is the gold standard for digital asset protection, it can be overwhelming and challenging for many individuals to take on this responsibility. For instance, forgetting a 12 to 24-word recovery phrase is a common occurrence, and it can have significant consequences. According to a 2021 report, over $140 billion USD worth of Bitcoin was lost and mostly unrecoverable due to issues like these.
The following sections provide an overview of how digital asset safekeeping and longevity are evolving and what users can do to implement better practices to protect their digital assets.
Safe Haven is among the first protocols that directly address the need for services that solve the unfortunate circumstance of an untimely death. Its dapp, Inheriti, is specifically designed for decentralized inheritance, making it a valuable tool for those who want to safely manage, store, and transfer digital assets like NFTs, passwords, pictures, and documents — even after death.
Inheriti uses a digital dead man’s switch, which is designed to be activated or deactivated if the human operator becomes incapacitated, such as through death, loss of consciousness, or being physically removed from control. This switch helps ensure that digital assets and private information remain secure, as centralized digital vaults are often not secure enough to protect against malicious third parties.
✅ Extra secure 3-layer topology with cold storage
✅ Unlimited amount of beneficiaries
✅ Beneficiaries don't need a wallet
✅ 100% decentralized
✅ Multi-patented protocols
— Inheriti® (@Inheriti_com) March 8, 2023
The Sarcophagus protocol, which is based on the Ethereum and Arweave chains, also uses a digital dead man’s switch to provide solutions for asset security and custody in the event of an untimely death. Users can store documents such as a seed phrase or other important information. If they do not check in by signing a regular cryptographic message, the assets will be automatically dispersed to the designated receiver.
Sarcophagus’s dapp is still in the testing stages, but it is making steady progress, with early access available on an application basis. The protocol can be particularly useful in cases such as will and trust, password recovery, credential pass-down, key material backup, emergency communication, and even political activism.
A dead man's switch like Sarcophagus, can play an essential role in providing immutable assurance for any digital #legacy. It uses data encryption, permanent storage on #Arweave, and immutable execution via #Ethereum contracts to ensure data security, privacy, and delivery.
— Sarcophagus ⚰️ (@sarcophagusio) February 7, 2023
WalletPort is one of the newest entrants to the scene, and unlike Safe Haven and Sarcophagus, it does not require a digital dead man’s switch. Instead, it uses a selected dormancy or time-lapse period to execute transfers. For example, a user can connect their wallet, select a six-month dormancy period, and define their beneficiary’s wallet. If the connected wallet has not had any activity for a fixed duration, the digital assets are automatically sent out to the beneficiary.
WalletPort’s founder and CEO, Harry, explained that the protocol is primarily designed to protect users’ crypto assets within self-custody wallets. WalletPort offers users tools to protect themselves against a multitude of scenarios where the user loses access to their wallet. These tools include the ability to designate backup wallets as beneficiaries, ensuring that if users lose their keys, they do not lose their assets. Assets protected by WalletPort are still one hundred percent in self-custody and tradable by the holder.
We are pleased to announce the release of our whitepaper 🙌
Take a look and let us know what you think 👉 https://t.co/fOk4pLTMdw
— WalletPort (@WalletPort) February 15, 2023
According to Harry, WalletPort will be offered for beta testing in the near future, with a strong focus on creating a user-friendly interface and experience to cater to a wide range of users.
After the beta release, the provider intends to introduce an NFT that can be minted and used as a lifetime access key. Alternatively, they will offer a subscription model with varying tiers based on the asset value held in the user’s wallet, and more information regarding this will be disclosed soon.