The digital asset market may have started with the humble beginnings of Bitcoin, but its fortunes have changed over the past decade.
At the time of writing, the total cryptocurrency market capitalization is at 1 trillion dollars despite continued turbulence and uncertainty in macro factors. More interestingly, this ecosystem not only introduced 24/7 decentralized markets, but created an opportunity for internet natives to make wealth for generations.
Looking back, Bitcoin and Ethereum were the main cryptocurrencies until 2017, when the initial coin offering (ICO) boom saw the debut of hundreds of digital tokens. Today, the market hosts nearly 13,000 digital assets, with decentralized finance (DeFi) and non-fungible tokens (NFT) ranking high on the list. The latter has been touted as the future of gaming, entertainment and digital art.
The issue of crypto inheritance
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 with 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 when recovering lost crypto funds.
But how effective is the seed recovery phrase when it comes to inheritance issues? There are currently over 4 million BTC sitting in inaccessible wallets, a large portion of these coins belong to people who have already switched. Furthermore, research by the Crenation Institute revealed that 90% of digital asset owners have concerns about what will happen to their wealth after they kick the bucket.
For those who prefer non-custodial wallets, it all comes down to whether someone is willing to share their opening phrase with potential heirs. While it may be a viable option, it’s not entirely foolproof considering that even the closest family members can betray them when money is involved.
The other alternative would be to store funds in centralized crypto exchanges such as Binance and Coinbase, which have established procedures for releasing funds to successors; definitely not the cup of coffee for crypto investors who believe in their own sovereignty.
NFT Value Proposition
According to the latest Dapp Radar data report, NFT demand grew 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 buzz in the metaverse in recent months. Unlike most early crypto innovations, NFTs proved to be of fundamental utility.
This value is now directed towards solving critical problems, including crypto legacy. By design, NFTs are unique (indistinguishable), making them a perfect tool in developing a crypto “StrongBox” for refunds and legacy transfers. Today, it is possible for a digital asset owner to create an NFT-powered StrongBox via DApps such as Serenity Shield, which recently launched its MVP.
So how exactly does it work Shield of Tranquility Does StrongBox work? This trustless crypto wallet solution provides users with secure storage for their funds powered by three unique NFT accounts. The first NFT is held by the owner, the second by the intended heir, while the last piece of the puzzle is held in the Serenity smart contract vault. In the event of death, the NFTs held by the heir and the Serenity Shield can be used to unlock the funds.
While less sophisticated crypto users may choose to stick with centralized exchanges, it is clearly evident that NFT infrastructure can offer a legacy solution for DeFi diehards. This type of crypto storage supports anonymity, which means that investors do not have to give up personal information to take advantage of the services. It is also almost a guarantee that the heirs will get what was intended for them based on the pre-encoded terms of the smart contract.
Wrap it up
Cryptocurrencies have great potential to become the next frontier assets in tomorrow’s financial market ecosystem. However, there is a fine line if current investors do not adequately plan how to transfer their wealth. As the article highlights, stakeholders now have the option of using centralized custodians or decentralized wallets to make sure their efforts don’t go to waste. More importantly, one must understand the market dynamics to make the right strategic decision.