Why NFT Technology Could be the Much Needed Solution to Crypto Inheritance
The digital asset market may have started with Bitcoin’s humble beginning but its fortunes have changed over the past decade.
As of writing, the total crypto market cap stands at $1 trillion despite the ongoing turbulence and uncertainty in macro factors. More interestingly, this ecosystem has not only introduced 24/7 decentralized markets but created an opportunity for internet natives to make generational wealth.
Looking back, Bitcoin and Ethereum were the main cryptocurrencies until 2017 when the Initial Coin Offering (ICO) boom set the stage for the debut of hundreds of digital tokens. Today, the market hosts close to 13,000 digital assets, with Decentralized Finance (DeFi) and Non-fungible tokens (NFTs) ranking high up in the list. The latter has been touted as the future of gaming, entertainment and digital art.
The Crypto Inheritance Question
And now the big question; can crypto wealth or NFT collectibles be passed down to future generations? The simple answer is yes, but this comes at an opportunity cost given the current structure of crypto wallets. In most cases, non-custodial wallets that are designed to interact with decentralized markets have a seed recovery phrase; it is the last line of defense in recovering lost crypto funds.
But how efficient is the seed recovery phrase when it comes to heritage issues? Currently, over 4 million BTC is sitting in inaccessible wallets, a good number of these coins belong to people who have already passed on. Furthermore, a research by the Crenation Institute revealed that 90% of digital asset owners have concerns as to what will happen to their wealth once they kick the bucket.
For those who prefer non-custodial wallets, it comes down to whether one is willing to share their seed phrase with potential heirs. While it may be a viable option, it is not entirely reliable, given that even one’s closest family members can betray them when money is involved.
The other alternative would be to store funds with centralized crypto exchanges like Binance and Coinbase who have established procedures for releasing funds to heirs; definitely not the cup of coffee for crypto investors who believe in self-sovereignty.
NFTs Value Proposition
According to Dapp Radar’s latest report, the demand for NFTs surged in Q2 compared to last year’s volumes and sales during the same period. Most of these gains can be attributed to the emergence of NFT-oriented games and the metaverse hype in recent months. Unlike most of the early crypto innovations, NFTs have proven to be of fundamental utility.
This value is now trickling down to solving critical issues, including crypto heritage. By design, NFTs are unique (indistinguishable), making them a perfect tool in the development of a crypto ‘StrongBox’ for fund recovery and passing down inheritance. Today, it is possible for a digital asset owner to create a NFT-powered StrongBox through DApps like Serenity Shield, which recently launched its MVP.
So, how exactly does the Serenity Shield StrongBox work? This trustless crypto wallet solution provides users with a secure storage for their funds, powered by three unique NFT accounts. The first NFT is held by the owner, the second one by the intended heir while the final piece to the puzzle is held in Serenity’s smart contract vault. In the event of death, the NFT held by the heir and Serenity Shield can be used to unlock the funds.
While less sophisticated crypto users might opt to remain on centralized exchanges, it is clearly evident that NFT infrastructure could offer a heritage solution for DeFi diehards. This type of crypto storage maintains anonymity which means that investors do not have to give up personal identifiable information to leverage the services. Additionally, it is almost a guarantee that heirs will receive what’s meant for them based on the pre-coded smart contract conditions.
Cryptocurrencies have a great potential of becoming the next frontier assets in tomorrow’s financial market ecosystem. However, there is a thin line should the current investors not plan adequately on how to transfer their wealth. As highlighted in through the article, stakeholders now have the option of using centralized custodians or decentralized wallets to make sure that their efforts do not go down the drain. More importantly, one needs to understand the dynamics of the market to make the right strategic decision.