Jack Dorsey’s Bitcoin firm, Block has created a way for named beneficiaries to claim Bitcoin after investors pass.
In a blog post on 26 February, the firm, through its mobile wallet arm, Bitkey said the inheritance feature solves a long-standing problem in the crypto space by letting users name a beneficiary to claim their coins without revealing their PINs or seed phrases while alive.
How it works
Bitkey first mentioned inheritance in November last year, but the feature hadn’t gone live until now. The feature basically makes it easier for a named beneficiary to access the Bitcoin of someone who has died.
Once a beneficiary is named while the Bitcoin holder is still alive, inheritance encrypts the owner’s spending mobile key with a wrapping key and then encrypts that wrapping key with the beneficiary’s public key.
Both encrypted keys are then uploaded to Block servers for use in the event of the Bitcoin holder’s passing, much like putting the wrapped mobile key in a safety deposit box that only the beneficiary has a key to unlock.
Neither Block nor the beneficiary has access to the account’s unencrypted mobile key at any point before the inheritance and 6 month “Delay and Notify” period is complete.
After the passing of the Bitcoin owner, the beneficiary can trigger the inheritance process through their Bitkey app, which initiates a 6-month security period within which time any of the two parties can stop the inheritance process.
Once the 6-month inheritance Delay and Notify period expires, Bitkey relays both the encrypted wrapping key and encrypted mobile key to the beneficiary, whose Bitkey app then uses their private key to decrypt the wrapping key, and the wrapping key to decrypt the mobile key.
They can then co-sign a transaction with the key on Bitkey’s servers and transfer funds to their own Bitkey. Only at this point can the beneficiary see the Bitcoin balance or access the funds.
Solving a major problem
Passing Bitcoin to loved ones or trusted business associates has been a challenge for decades, which has resulted in exchange CEOs passing with private keys, leaving investors stranded.
With the inheritance feature at Block, this will definitely change and make Bitcoin inheritance a reality while also preserving the security of Bitcoin holders.
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