I was just thinking about putting some crypto in a cold storage wallet when I came across this story and had to ask myself, What if I suddenly die like this guy and my family doesn’t know where I hid my cold storage UBS drive, and if they did, how would they access it without the password. Does anybody have any ideas about what to do in a case like this?
$190 Million in Crypto Gone Forever, How Canada’s Biggest Bitcoin Exchange Lost it All
QuadrigaCX, the largest bitcoin exchange in Canada, has lost $190 million worth of crypto after it lost access to its cold storage wallets.
An affidavit filed on January 31 with the Supreme Court of Nova Scotia revealed that $190 million in Bitcoin, Bitcoin Cash, Bitcoin Cash SV, Bitcoin Gold, Litecoin, and Ethereum were lost.
Jennifer Robertson stated that Cotten was solely in control of storing user funds in cold storage wallets. In crypto, cold storage refers to a wallet that is not connected to the internet and stored offline.
Wow! I have heard such stories in my friends’ circle. This is true, if you lose the password to a cold storage wallet, your money is lost. There is no way to retrieve it. So if you want to pass on your wallet to your family, they should know exactly how to access it.
That is indeed a matter to pay attention to. I think just like how we are digging up the remains of dinosaurs when some advanced civilization of the future tries to dig up the remains of our civilization, they are going to find these cold storage wallets and who knows maybe bitcoin will be worth $2 billion then. There are endless possibilities, but yes, your concern is genuine. I think as soon as the person dies the family begins their hunt to find the treasure that he left for them.
-It really will depend on the person and how much cryptocurrency you are actually talking about.
If the amount is significant, then maybe consider multiple bank deposit boxes, across multiple, different banks, and keep the password(s) and drive(s) separate, along with separate instructions for each, so that no, single person (or attorney) has access to everything. You can use multiple drives to further-divide/protect the funds if they are really large.
A very simple scenario:
Trusted person-A/law firm-A gets key to box-A (drive-A).
Trusted person-B/law firm-B gets key to box-B (drive-B).
Trusted person-C/law firm-C gets key to box-C (passwords).
Then, just draft the necessary legal documents and contracts instructing the who and the how regarding access and allocation of funds.
Otherwise, if you want to keep things simple, just use a single layer of security and tell someone that you trust, that will honor your wishes. Depending on where/how you secure the items, you may need to take additional steps to ensure that the trusted person has access after you are gone.
Needless to say, there are many different ways to approach this; some, better than others.
As I sit and read more and more stories like this, I realize that something is missing. Then it hit me, see if yall agree, here it is.
The words cold storage wallet catches my attention
I believe the word wallet is taken for granted, just like any real wallet in your pocket it can get lost, but people see it as a way to store large amounts of crypto/money off the grid without a bank or anyone else knowing and don’t realize that it can be lost or stolen.
Again, the word “wallet” is taken for granted. How many of us would carry $5,000 to $10,000 in our wallets? So, if we stick with the wallet concept, maybe we shouldn’t use such wallets for large amounts of money.
A ‘wallet’ is just a means of storage. You can call it whatever you like. Such storage can be kept in a safe or something more secure. In terms of larger amounts, you can divide up the funds so that the money is stored in multiple wallets and safes so that if one goes away, you still have something to fall back on.
I do think that people need to educate themselves so that they are aware of the potential threats associated with virtual currency, though, especially since it can be accessed remotely, unlike a physical wallet.
Agree, The way we perceive a wallet when it comes to carrying money doesn’t change. if I lost my wallet or if I had it stolen and told my friends how much money was in it, they would ask why I had so much money in it. Should we view cold storage wallets similarly to the wallets we carry?
Mind you, I’m basing this on the word “wallet” in cold storage wallet and how we treat our personal wallets
-Probably not. You do not need a password to open a physical wallet. Part of the reason people may limit how much they put in physical wallets is two-fold:
space limitations
because there are digital alternatives (credit/bank cards) available so that we do not have to carry around so much cash
-Depends on your situation, I suppose. You could keep the password with it, but if you do not have to, then probably better to keep them separate. Safety deposit boxes are typically not insured. Just my opinion.
I know early on it was common for some to printout their holdings (via QR codes). Put them all in a binder and then store them in a safe. Much like cash, they would remove how ever much they needed.
In the event of my untimely death, a trust fund or will would be a better option. There’s a reason these people always keep their wallets and passwords hidden.
I was vetting a new broker and looking at their crypto deposit options this afternoon. Thought of you guys when I saw this. Laugh or cry? Keeping good company as usual but where’s Syria, Cuba and Afghanistan? Dismal.
FTX bought out by Binance due to liquidity crunch… SMH. These major crypto companies imploding are making the case easier for heavy handed regulations.
US Investigating FTX Empire Over Handling Of Customer Funds: Report
US regulators are investigating whether Sam Bankman-Fried’s FTX properly handled client funds following the exchange’s liquidity crunch, Binance acquisition.
SEC, CFTC reportedly probing FTX over handling of customers’ funds.
Investigations also relate to lending.
SEC probe reportedly predates Binance’s acquisition of FTX.
U.S. financial regulators have apparently been actively following the carnage that’s ensued in cryptocurrency markets over the past couple of days.
According to a report by Bloomberg, people familiar with the matter said the Securities and Exchange Commission and the Commodity Futures Trading Commission are investigating the liquidity crunch at FTX that led to its non-U.S. operations being acquired by competitor Binance, the world’s largest exchange, on Tuesday.
What started as apparently a clash between crypto’s two wealthiest founders quickly spiraled into a deal between them to save FTX from collapse. Binance CEO Changpeng Zhao announced his company would be offloading half a billion dollars worth of the rival’s native token, FTT, which triggered a sharp selloff of the token and culminated in FTX’s Sam Bankman-Fried being rescued out of a “liquidity crunch.”
