Crypto giant Binance is pushing for a 'will function' on platforms to facilitate asset transfer after death
Central Figure Urges Implementation of 'Operational Guarantee' to safeguard Cryptocurrency Succession amid Estate Issues
Binance founder Changpeng Zhao (CZ) is urging cryptocurrency platforms to implement a "will function," to tackle the growing need for clear inheritance systems in the digital assets space.
In a recent statement, CZ said, "Every platform should have a 'will function'-so that when someone is no longer around, their assets can be distributed to designated accounts according to specified proportions."
This call comes after community concerns over the vast amount of crypto assets transferred to centralized exchanges due to accidental deaths. Many traders fail to share details about their holdings or the platforms they use with their families. CryptobraveHQ, a Web3 community builder, highlighted this issue in a post, referencing a tweet made in April. They pointed out that over $1 billion worth of crypto assets are transferred to centralized exchanges each year due to deaths.
Addressing these concerns, Binance rolled out an "emergency contacts and inheritance heir" feature on June 12. This allows users to designate emergency contacts and submit an application if their account becomes inactive for an extended period or in the event of death. This feature enables users to choose who might be eligible to receive their crypto holdings.
Once the set inactivity threshold is reached, the exchange will contact the emergency contacts listed. If verification is successful, those individuals can begin the inheritance claim process.
Other platforms like Coinbase and BitGo are taking different approaches to handle crypto estate planning. Coinbase requires heirs to provide legal documents like death certificates and wills to claim assets. Despite it being a manual process without in-app beneficiary settings, BitGo uses multi-signature wallets, cold storage protocols, and customizable access controls to support inheritance. This is accomplished through legal third-party partnerships.
Meanwhile, Binance is leading the way in transparency, consistently maintaining a reserve covering level above 100% in its Proof of Reserves reporting.
Binance's solution takes a practical and user-friendly approach, making it easier for non-experts to take control of their digital assets' inheritance. Differentiating itself from other platforms, Binance streamlines the process, enabling users to designate beneficiaries or emergency contacts without the technical complexity often associated with decentralized alternatives.
As the crypto industry matures, platforms and tools addressing inheritance issues will become increasingly necessary. The push for digital asset inheritance solutions illustrates a shift towards a more comprehensive range of solutions to accommodate the diverse needs of the entire ecosystem.
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Cryptocurrency platforms are recognizing the increasing importance of addressing inheritance issues in the digital assets space due to the increasing amount of unclaimed crypto assets. Various approaches have emerged, ranging from traditional custodial solutions to more advanced decentralized and smart contract-based methods.
Binance’s Approach: Emergency Contacts and “Will Function”
Binance's inheritance solution, the "Will Function," lets users designate beneficiaries or emergency contacts who can access their digital assets after a period of inactivity or death. This feature is integrated directly into Binance’s custodial exchange platform, making it accessible without cumbersome technical knowledge. The system alerts the emergency contact after a certain period of inactivity, enabling secure and straightforward asset transfer. Binance's founder, Changpeng Zhao (CZ), advocates strongly for similar functions across all crypto platforms to prevent billions of dollars in lost and unclaimed crypto assets.
Other Platforms’ Methods
Other cryptocurrency platforms and tools addressing inheritance issues employ various methods such as:
- Crypto Will Generators: Some services help users create crypto-specific wills that legally designate beneficiaries and provide instructions for asset transfer upon death. These are usually separate tools that require external legal or technical setups.
- Custodial Inheritance Services: These services hold digital assets with provisions for transferring them to heirs as per user instructions, relying on centralized custody but focusing on inheritance functionality.
- Decentralized Inheritance via Smart Contracts: Several platforms are developing smart contract-based solutions where the inheritance conditions (e.g., time lock, multisignature arrangements) are pre-programmed on the blockchain. For instance, proposals to shard private keys into NFTs shared among designated heirs through multisig thresholds are being considered, enabling automated asset transfer upon meeting specific conditions.
- Multi-signature Wallets for Inheritance: These wallets require multiple private keys to authorize transactions, useful for inheritance as heirs control part of the access keys, allowing for joint management.
Comparison to Binance’s Method
| Aspect | Binance's Inheritance Feature | Other Platforms’ Methods ||------------------------------|---------------------------------------------------|--------------------------------------------------|| Integration | Integrated directly into custodial exchange | Often separate tools or decentralized protocols || Ease of Use | High; no technical knowledge needed | Varies; decentralized methods require expertise || Custody | Centralized custody by Binance | Mix of custodial and decentralized custody || Inheritance Mechanism | Emergency contact notified after inactivity | Smart contracts, wills, multi-sig wallets || Automation | Semi-automated via platform triggers | Fully automated via programmable contracts || Security Concerns | Relies on Binance’s security and trust | Decentralized methods rely on cryptography, but there's risk of key loss || Coverage | Currently focused on crypto assets in Binance | Some aim to cover tokenized wealth, NFTs, and digital identities |
Binance's solution stands out for its straightforward, user-friendly custodial inheritance system, which removes many technical and legal barriers faced by users when using decentralized wills or external services. While it might not offer full automation through smart contracts or decentralized asset control, it has gained positive reception for its practicality and accessibility for the majority of users.
However, the broader crypto ecosystem is still exploring more comprehensive and technically advanced inheritance frameworks that incorporate smart contracts, NFT-based key sharding, and multisignature wallets to automate and secure digital asset succession beyond what centralized platforms currently provide.
In summary, Binance's emergency contact and inheritance feature is a significant step towards addressing crypto inheritance challenges, prioritizing user-friendliness and custodial security. While other platforms are pursuing more decentralized or legalistic approaches offering greater automation and security, they often come with complexity and accessibility drawbacks. The crypto industry is transitioning towards a more holistic range of solutions to address digital asset inheritance needs comprehensively.
The Binance's emerging 'Will Function' serves as a practical solution for designating beneficiaries or emergency contacts for digital assets, streamlining the process for non-experts and addressing the growing need for clear inheritance systems in the digital assets space. Other platforms like Coinbase and BitGo use different methods for handling crypto estate planning, such as requiring legal documents for asset transfer or employing multi-signature wallets to support inheritance. As the crypto industry evolves, various approaches ranging from traditional custodial solutions to more advanced decentralized methods are being developed to accommodate the diverse needs of the ecosystem, including smart contract-based solutions and NFT-based key sharding for automated asset transfer.
