Dead man’s switch? Sounds ominous and intriguing at the same time. And yes, it does have something to do with a dead man. Though none of us want to think about death, let’s face it. We are mere mortals. And unfortunately, we do come with an expiry date.
Now before you decide to move on to a happier topic, we think you will find this one quite fascinating. Especially if you are a crypto hodler. Because as with all things that we accumulate in life, we need to think about what we will do with our crypto when we are no longer around to enjoy it. A dead man’s switch might just be the answer.
What Is a Dead Man’s Switch?
In the physical world, those who work with machines are probably already familiar with this term. It refers to a switch that is triggered when its human operator becomes incapacitated for whatever reason. It could be death, loss of consciousness, etc. This fail-safe switch prevents the machine from continuing to operate in an unsafe manner and potentially causing harm.
The dead man’s switch has also found application in the crypto world. It addresses a very real problem that exists. You see, whether you have thought about it or not, these are questions that need to be considered: What will happen to your crypto when you die? How can you ensure that your loved ones will inherit them? Unless you want your crypto to stay locked up forever, you need to plan ahead.
Storing Your Crypto
Just as we keep cash or cards in a physical wallet, we store our crypto in a digital wallet. A digital wallet allows you to not only make transactions with your digital currencies but is also a place where you store your public and private keys. The public key is used to generate your public address, so that someone wanting to send you crypto will know where to send it to. It can be likened to a bank account number.
A private key, however, is like the PIN number to the account. It is known only to the user, and serves as his personal digital ID. With it, he can access his funds, and spend, withdraw, or carry out any other transaction for his account. Unlike a simple pin though, the key is made up of a 256-bit long string of alphanumeric characters.
The private key is what you need to guard with your life, because it grants access to the crypto stored at a given address. It is needed for both authentication and encryption. Revealing it to others is like handing over control of your crypto. Because you are the only one who holds that private key, you alone are responsible for keeping that information safe. Once it is lost, there is no way of recovering it. Your crypto will be locked up forever.
Passing On The Info
So now you understand why it’s important to safeguard your private keys. And you’ve gone to great lengths to save a copy of these keys and back up phrases. But now, what happens if you should suddenly become incapacitated or die? How could you make sure that your keys will be passed on to your loved ones?
Safeguard Your Keys
Ideally, we could keep a record of our private keys in our will, so that at death, our beneficiaries will inherit our crypto. But that would require that we put our trust in a, perhaps not so trustworthy, third-party like a lawyer. In some ways, this defeats the purpose of owning crypto. Crypto allows us a measure of anonymity, security, and is trustless. It’s supposed to eliminate the need for trust in a third party.
While using a lawyer is not necessarily a bad thing, there are some things to consider. If our will is stored in a database at a law firm, it might also be accessible to other lawyers, who could potentially steal the information. Or the database might be hacked and the information was stolen that way. And in some jurisdictions, our will can become public record.
Once the keys are stolen, the individual could spend the digital currency. Because of the immutable nature of crypto assets, those funds could never be recovered because the transactions cannot be reversed. The important thing to remember is to always keep your private keys, private.
Why Use a Dead Man’s Switch?
You might be thinking that the amount of crypto you actually have is relatively small, compared to the rest of your estate. But having some way to pass your crypto assets on to your beneficiaries is still something worth looking into. The potential exists for even a small amount of your digital assets to be worth a lot more when prices rise in the future.
How Does a Dead Man’s Switch Work?
One way we can ensure the smooth transfer of our private information at death is to use a dead man’s switch. There are a number of apps currently being developed that employ a dead man’s switch on a blockchain platform.
Essentially, they work on the same basic premise. A switch is triggered in the event of a user becoming incapacitated or dying. Once the switch is triggered, a message is sent to the recipients. The message may contain instructions on how to access the private keys, passwords or seed phrases, or some other secret.
How does the switch determine that the user has passed away? Basically, it requires that the user “checks in” in some way on a regular basis. Perhaps this is once a week. Or even once a year, on his birthday. This will confirm that the user is still alive.
When the user fails to check-in, it is then assumed that the user has passed away. A smart contract will then execute. And the secret will be automatically transferred to the recipients. The use of a smart contract is advantageous because it ensures that the assets will be transferred to the beneficiaries without hindrance.
An example of a switch that is currently in development is on the Lightning network. The app is called FinalMessage. With this app, the user must engage with the switch on a regular basis. This is done by making an annual bitcoin payment of $50, which will extend the switch for another year. As the switch nears its expiration date, the user will be sent reminder emails. In the case where the user fails to renew, the worst is assumed. The secret message is then deployed to the recipient.
Some additional features for this switch are currently in development. It includes a program that would maintain the privacy of the sender and receiver. As well as a way for the sender, while he is still alive, to get proof that the service still has the secret.
Potential Pitfalls of a Dead Man’s Switch
The idea of a dead man’s switch is great in principle. But will they work in real life? Well, consider some potential pitfalls.
The platforms on which these triggers exist are still relatively new. One of the “oldest” platforms being used is the Ethereum platform. It has only been in existence for about 5 years. Additionally, the platform is still a relatively new technology. As a result, it has yet to be thoroughly tested on a large scale for a long enough period. Can we really trust this technology with our hard-earned currency? Some might feel that this is not the case.
Smart contracts are quite often coded and stored on a decentralized blockchain network such as Ethereum. These are executed when the switch is triggered. They result in the transfer of assets to the recipients.
Smart contracts have the advantage of being easy to use. The assets can be transferred without a lot of legal hassle. They also have lower costs than traditional contracts administered by a third party, such as a lawyer.
But they are not without vulnerabilities. They may be subject to hacking if they are poorly coded. In the past, there have been reported cases of crypto being stolen due to hacking on platforms such as Ethereum. According to one report, in 2017 alone, $500 million was lost or stolen due to poorly coded contracts.
Dead Man’s Switch May Be Vulnerable
The use of a dead man’s switch for the transfer of inheritance is also relatively new. They have only come into existence in the past few years. Though apps are available, they are still considered to be in the development phase. It is not a fully tested idea. Work is still underway to make them more reliable and foolproof.
The idea of a switch requiring the user to check in periodically can open the way for hijacking. There are two ways in which this may happen.
One way is that the switch could be triggered by means of a false positive. In this case, the secret is prematurely leaked. This would be the case if the user is somehow prevented from checking in, either physically or if the network itself comes under attack.
The second way is that the switch could be triggered by a false negative. In this case, the user has failed to check-in. But the secret does not get passed on. This could potentially occur if someone “impersonates” the operator of the switch. Or if the recipient is somehow prevented from gaining access to the secret.
Other Things to Consider When Transferring Your Assets
Besides pitfalls with the switch itself, another thing to consider is who we will leave our crypto assets to. You see, you may be well-versed in the use of crypto and blockchain technology. But those inheriting your assets may not be all that knowledgeable.
However, the onus will be on them to know how to manage those private keys, once it is in their possession. And with neophytes, there is a potential that such keys may end up lost. So it is up to you to ensure that those to whom you pass your crypto will be knowledgeable and comfortable with its use.
On top of that, there is a constant need on your part to keep updating your keys every time you buy, sell, or move your assets. So cost and effort is required for its upkeep.
Some Final Thoughts (No Pun Intended!)
While the dead man’s switch has not yet been fully tested and tried, it holds great promise. With it, we can ensure that our assets will automatically be transferred to our loved ones. Without a doubt, digital assets will become increasingly popular in the future. And the technology associated with the transfer of those assets will continue to innovate.
If anything, we hope that this article will have you thinking about your crypto legacy. Of course, you may also choose to let your crypto die with you. In which case, other crypto holders will benefit from the shrinkage in supply. Either way, we can be sure that someone will benefit from your demise!