What is Cryptocurrency?
Cryptocurrency is a digital currency that can be used to buy goods and services online. You can buy cryptocurrency or “mine” cryptocurrency using computer technology. Cryptocurrencies are becoming a modern investment opportunity. There are thousands of different cryptocurrencies that are traded publicly including Bitcoin, Ethereum, Binance Coin, and Tether. Cryptocurrency is popular for a variety of reasons: it is seen as the currency of the future, it removes banks from managing the money supply, and the technology behind cryptocurrency is very secure. Cryptocurrency uses a secure technology called blockchain. Blockchain is an online record-keeping network that is protected by digital cryptography where no single individual has control or ownership of the transactions or data within it and users access their data using a secured key code.
How Does Cryptocurrency Differ from Traditional Currency?
The main difference between cryptocurrency and traditional bank accounts is that cryptocurrency does not have a beneficiary designation or have a physical medium of exchange. Cryptocurrency is a digital medium of exchange, is produced by computers, is in limited supply, is not controlled by any government or financial entity, and its value is determined by supply and demand. Traditional flat money in bank accounts is a physical medium of exchange, is represented by bills and coins, is in unlimited supply, is regulated by the government and banking system, and its value is determined by market and demand.
If I have Cryptocurrency, Should I Include it in My Estate Plan?
If you currently own cryptocurrency, it should be addressed in your estate plan. It is important to select trustworthy fiduciaries who will appropriately manage your cryptocurrency after you pass away. It is also vital to include language in your estate plan that permits your fiduciaries to access your digital records to administer cryptocurrency in your estate. If your fiduciary uses your passcode without the proper permissions, they could be breaking the law. Finally, it is a good idea to create a cryptocurrency access guide for your fiduciary. This should include information on the types of cryptocurrencies you own, the number of shares, and how to locate and access your cryptocurrency accounts. It is a good idea to write this information down and store it in a secure (but accessible) location.
If you have any questions about cryptocurrency or addressing it in your estate plan, please contact our firm.