Bitcoin can be complex and overwhelming, and we believe it takes a minimum of about 100 hours of study to obtain an understanding of it. One of the easiest ways to view Bitcoin is as “digital gold” but with some improved properties such as extreme portability and guaranteed scarcity. Like gold, it needs to be stored in a very secure place that you can access relatively easily, and that your heirs can open by following a specific set of instructions when you are gone.

If you purchased $1 million worth of physical gold it would weigh about 35 pounds. Let’s assume this gold was in standard 1 kilogram (2.2 lb) bars, or around 15 bars. You would now need to store those gold bars in a secure place such as a large safe in your home. A “secure” safe is one with a strong lock that is bolted to the floor. This would make it difficult for anyone to access it or remove it from your house without permission. If someone did manage to steal your gold, it would likely be gone forever, so strong security is paramount.

Bitcoin, like gold, needs to be stored in the strongest possible safe. But since Bitcoin is digital, it is not constrained by the same laws of physics as gold. Imagine an asset with similar economic properties to gold, but without any increase in weight or volume based on the amount being held. This makes Bitcoin highly portable compared to gold with the added benefit of being able to secure it with cryptographic proof of ownership and multiple “keys” to the safe. This means that instead of storing it in the strongest and most secure physical safe, you can store it in a strong and secure digital safe that far exceeds anything the physical world can offer. In fact, you can store Bitcoin in ways that make it practically impossible to steal. The trick is to make sure it is not so secure that you are unable to access it in the future.

Additionally, selecting the right storage method for your Bitcoin is even more critical than storing physical gold. You technically do not need to store your gold in a safe. You could stack some bars in your closet or even display them as art in your home. Unless someone stole them, you could see them on a regular basis, and you would know where they were. If you ever wanted to move them, you could just pick them up and do so. Bitcoin is much different in this regard, as Bitcoin never has a physical presence, therefore requiring a digital storage solution. There are numerous ways to store Bitcoin, with more being introduced each year. Owners of Bitcoin need to find the right balance of security and convenience that best matches their objectives, concerns and technical abilities.

When you eventually die, you want to make sure that your heirs have access to your gold. After all, it has significant value and will provide for and protect them when you are no longer around to do so. As such, you want to have a plan in place that, upon your death, notifies your heirs of the existence of the gold, its location, and instructions on how to access it. You also want to make sure that the inheritance plan you have in place ensures that the gold is distributed in accordance with your wishes. Finally, you want to ensure that the person accessing the gold does not disappear with it, thus depriving your heirs of their bequest.
Like gold in a physical safe, when you die, you want to make sure that your heirs have access to your Bitcoin and other digital assets. Since it is significantly more difficult to open a strong Bitcoin wallet or digital safe, you need to make sure that your heirs have a foolproof roadmap in place. Otherwise, your Bitcoin will be lost forever and will never go to your heirs. There are many lessons that can be learned from past mistakes here, but few are more heartbreaking than Matthew Mellon, who died with $500 million worth of digital assets that his three children could not recover. Mr. Mellon set up a strong storage solution for his assets, but he did not set up the plan for his children to open that safe if he passed away.

Like gold, when you secure your Bitcoin, make sure it is in the strongest safe possible and that your heirs can open that safe when you are not around to help them do so.

Bitcoin Butlers can help you design and implement a strong inheritance plan as well as a secure storage plan for you and your family. For more help on this, please click here.