Jack Dorsey, co-founder of Twitter Inc., speaks during the Bitcoin 2021 conference in Miami, Florida, U.S., on Friday, June 4, 2021.
Eva Marie Uzcategui | Bloomberg | Getty Images
For over a decade, bitcoin has been lauded as a revolutionary financial asset — decentralized, self-sovereign and resistant to confiscation — all contributing to an astronomical increase in value.
But one problem has remained largely unsolved: What happens to your bitcoin when you die?
While traditional financial institutions allow for the seamless transfer of stocks, mutual funds and retirement plans, bitcoin’s self-custodial nature makes inheritance and estate planning inherently thorny. Coinbase requires probate court documents and specific will designations before releasing funds, while physical wallets offer little to no support, potentially leaving all that digital value stuck on a private key.
Jack Dorsey’s Block says it’s created a fix, and the company is now bringing it to market.
In November, Block’s Bitkey self-custody bitcoin wallet introduced an inheritance feature that lets users set a beneficiary for their bitcoin holdings, creating a simple system for transferring the digital currency in the case of death. The feature is being rolled out on Wednesday.
“A lot of people have significant amounts of bitcoin at this point, or appreciating bitcoin, that’s sitting in a place where it’s not going to get to their loved one,” said Jason Karsh, who joined the company in July and is now Bitkey’s head of business. “It’s just kind of a multibillion-dollar problem waiting to happen that we’re hoping to solve by making it super easy to recover in the case of your death.”
Karsh said that with other bitcoin storage products, beneficiaries typically have to provide extensive legal documentation. And hardware wallets often require a user to store seed phrases in a way that exposes their bitcoin to unnecessary risks.
Bitkey is one of the remaining pieces of Dorsey’s crypto strategy at the company he originally started as Square. The same month that Block announced the inheritance product, the company said it was winding down its unit called TBD, which was created in 2021 to focus on bitcoin. TBD was designed to be Block’s platform for developers in an effort to create a more decentralized, secure and private internet.
In shuttering TBD, the company said it would still be investing in Bitkey as well as a bitcoin mining initiative, while continuing to allow users to buy bitcoin through the Cash App.
Unlike traditional crypto exchanges that profit from holding user funds, Bitkey makes money through hardware sales and, potentially, transaction fees. The Bitkey device is a self-custody bitcoin wallet that users purchase to store their private keys securely.
For the inheritance offering with Bitkey, the company lets the user create a separate key for the beneficiary that’s uploaded to Block’s servers. The beneficiary has no access to the key until six months after the owner dies. The funds will then be securely transferred to the beneficiary’s own Bitkey wallet.
Beyond Bitkey, Dorsey said in the company’s latest earnings report that Block expects to deliver its first bitcoin mining chips this year, and is “building the infrastructure to scale faster, investing in next generation chip design and mining systems.”
