Even though the Indian government is playing hide and seek with legality of cryptocurrency in India, Indians like citizens world over are bit by Bitcoins and other crypto currencies and investing in the same. This is the reason why NPowersU has restrained from adding cryptos in investment basket in its case study “Investments”. This blog is dedicated to safeguard interest of investors in these assets.
Unlike tradtional investments, be it shares and securities including bullion ETFs, investments in cryptos are stored in a ‘Wallet’. These wallets may be either ‘digital’ and managed on an app or website or ‘physical’ like a thumd drive. These are encrypted with multiple passwords being key, PIN and recovery phrase. Any one is lost or you cannot remember, then investments in crypto is lost forever. Similarly in case if all these three passwords are known to anyone, then too you lose your priced possession. Therefore storage method cannot be very simple nor very complicated.
Wallets are of two types:
- Hot Wallet: These are used for trading and purchasing cryptos. The upside is they are typically free and convenient, but the downside is they are less secure because they are always connected to the internet. The hot wallet is like a checking account – with money moving in and out.
- Cold Wallet: These are used to store crypto for a longer period of time. The cold wallet is more like a savings account, where you park money for a longer time.
One can have both wallets at the same time.
Now the most important part – What happens in case one passes away suddenly? One needs to plan for crypto succession as well just as any other assets that can be willed. Name a beneficiary in your will and add a document to your estate plan that lists your crypto assets and any passwords, PINs, keys and instructions to find your cold wallet. If you have an account at a cryptocurrency exchange, your beneficiary can contact customer support to notify them of your death.
NPowersU Team Expert Opinion
The returns in the crypto currencies is so phenomenal that today even a hawker is willing to put his/ her hard earned money in them. Without regulations in place, it is a no brainer that some unscrupulous persons would have started defrauding these people in the name of investments in them. Further investments and storage in these assets is so technical that even educated and tech savvy people will find it hard initially to keep a tab thereon.
With this sound advice to the government, let’s conclude this blog with a funny statement:
In western countries citizens will their assets to their pets too. So in case a lucky dog inherits sizeable crypto assets then we will surely say,
“Every dog has its day.”
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