What happens to digital currencies after death?

Bitcoin is real money, as the European Court of Justice has at least decided on tax issues. Even though the price has fluctuated between 150 and over 1000 euros in recent years, it can be assumed that bitcoins will continue to be valued. It is still unclear what happens to cryptocurrencies when the owner dies. Therefore, here are some precautionary tips.

Tip 1: Storage and backups

By itself, bitcoins are nothing more than information: in a “wallet file”, the wallet.dat, strings are stored that make the owner of the file the owner of a certain amount of currency. This can be imagined as a pure numbered account: Who knows the number, has the account.

Therefore, it is essential for the permanent storage of Bitcoins that this file is not damaged, but also can’t be stolen. It therefore makes sense to make regular, encrypted backups of the file and store it in multiple locations. For example, you could save the file encrypted on a USB stick, in a Dropbox directory and on the home PC.

In this scenario, it is important for the bereaved to know the storage location of the latest wallet.dat, the encryption tool and the password.

Tip 2: inform relatives about Bitcoins

Bitcoin is a niche topic. Therefore, it is even more important to inform relatives in advance that Bitcoin is a virtual currency and that you own Bitcoins. The rough functioning should also be explained.

It is also helpful if the relatives are also told what they can do after the death of the owner with bitcoins, how they can be exchanged for other foreign currencies and who can help in case of doubt.

Tip 3: Wallet services for Bitcoin

If you use Wallet services despite certain security concerns, you can pass on the access data to this service. This eliminates some technical hurdles for survivors.

Tip 4: Rather not pass the treasury

Just who has an old stock of Bitcoins, this has probably acquired largely anonymous. The possibility to buy Bitcoin through banks have only been around for a short time – previously, anonymous purchases via portals or prepaid credit cards were the rule.

Anonymity suggests that the money can be well hidden from the treasury. This is not only illegal, it also has several side effects:

Anonymity only seems to exist, since all transactions that have ever been made with a bitcoin (or parts of it) are stored forever

The money can be heavily exchanged for goods, services or foreign exchange – as with any form of black money

Should the Wallet.dat fall into the wrong hands, the legacy may soon be gone – without the possibility of legal prosecution.

It remains a matter of consideration whether one “reports” the money. In addition, it is not yet known whether and to what extent or on the basis of which price inheritance tax at Bitcoin arises.

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What is Bitcoin?

Bitcoin is a globally recognized decentralized payment system. When making payments, transfers from an aggregation of computers via the Internet are handled using a special peer-to-peer application which is also known as a computer-to-computer connection. Unlike traditional banking or payment transactions, no central clearinghouse is required while trading bitcoin.

How exactly Bitcoin was created is still a mystery. Nobody really knows who invented Bitcoin. It is believed that the concept was devised by a programmer named Satoshi Nakamoto, who wanted to create a means of payment that is detached and independent of states and banks. Whether Sathoshi represents a single person or a grouping is also not known.

How many Bitcoin is there?

There is a maximum of Bitcoin. This limit is set at 21 million. This limit has been introduced to ensure that the cryptocurrency can’t be duplicated unchecked. Of course, this limit also has a direct impact on the Bitcoin course. Currently not all Bitcoin created have been uncovered. This process is called mining.

What is mining and does it affect the Bitcoin course?

Mining is the so-called generating process of bitcoins. The higher the specific processing power, the higher the chances of being rewarded with Bitcoin or the associated transaction fees. The focus of the computing power is not on the CPU but in the most common methods on the graphics card GPU. The GPUs are therefore better aligned with the complex computational processes of Bitcoin and other cryptocurrencies.

With normal commercial home computers, however, the computational burden is not worthwhile, since the electricity costs are now higher than the yield of Bitcoin is ultimately worth.

Therefore, to effectively operate bitcoin mining, specialized computers are needed that are particularly fast in computing these complicated mathematical formulas. Therefore, the so-called ASCII computers are of course also correspondingly expensive and must be additionally constantly upgraded by the ever-increasing computing requirements.

If you still want to participate in Bitcoin mining with your home computer, you can now join well-organized mining pools. The computing power is brought into the cloud, which in combination generates a very high computing power. This is called in the scene of Cloud Mining.

Does the mining affect the Bitcoin course? Of course, the mining also has its impact on the current Bitcoin course. The more Bitcoin found and in circulation, the less available. This can be positive for the course as well as negative.

What is Bitcoin Wallet?

If you want to use Bitcoins, you must first set up an account called Bitcoin Wallet on your computer or mobile phone. The wallet software manages your Bitcoin addresses, through which you can send or receive bitcoins.

So, these are some important information about the bitcoin you should know before start trading.