Bitcoin Industry Grapples With Inheritance

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rgMekanic

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Bitcoin is starting to deal with the problem of inheritance. In a report from Bloomberg, five years ago, 26 year old Matthew Moody was killed in a plane crash in California. His father, a retired software engineer, knew his son was mining bitcoin when the cryptocurrency was in it's infancy, and has spent the last 3 years trying to locate them. Provisions are being made CoinBase can transfer the assets if documentation such as a death certificate is provided.

This is definitely a problem people into cryptocurrency need to think about. Things happen all the time, perhaps a safety deposit box with your wallet and instructions isn't a bad idea if you're holding quite a lot.

“There is no authority that could be appealed to fix this,” Nolan Bauerle, director of research at cryptocurrency analysis website CoinDesk, said of an individual’s Bitcoin stash becoming inaccessible after they pass away. “Those coins would be abandoned.”
 
First, tax it properly as income. Make them pay just like the rest of us. It's basically a tax free criminal operation anyways, unless it's reported.
 
Nukester said:
First, tax it properly as income. Make them pay just like the rest of us. It's basically a tax free criminal operation anyways, unless it's reported.
Click to expand...

From intuit:

"Received an inheritance of cash, investments, or property? ... Inheritances are not considered income for federal tax purposes, whether you inherit cash, investments or property."

Though I think on the state level, an inheritance is taxable.
 
Nukester said:
First, tax it properly as income. Make them pay just like the rest of us. It's basically a tax free criminal operation anyways, unless it's reported.
Click to expand...

did you report your garage sale earnings?
what about your online purchases that didn't have tax applied?
no?

... criminal




On topic --

There needn't be a way to automatically get the money to the dead person's family if they didn't set that exchange up in advance. That's the way the cookie crumbles - as the saying goes.

Decentralized currency - no authority - take the good with the bad. If someone can figure out how to get that father the dead son's currency without knowing the private key (password), then that's a vulnerability for everyone else and the whole concept is broken.
 
This is one of the problems of cryptocurrency - there is no reputable institution behind it. There is no government or bank or authoritative industry backing the electronic currencies used.

Most of the people who started the cryptocurrency craze don't want a government or bank to be in charge of their money, but with the current system there is no one who can establish rules that fall outside of an agreement of transaction, no one with authority to investigate wrongdoers, no one with authority to arrest and punish wrongdoers, or anyone who can act as a final arbitrator of disagreements. Finally, there is no one who can establish the bonafides of a currency. These might not seem important, but a 'society' is just a collection of rules that allow people to live together. Introducing any element that can operate outside of the rules of society is always going to be predatory. Think about that.

There are three entities who I would nominate to create a cryptocurrency:

1. Switzerland. Those guys have been thinking about money for centurys, and they've been pining for something that will let them recreate the walls of the Swiss banking system. They'd do it right.
2. Spacex. 'Cause your money would be good on Earth, and good on Mars. Maybe even on the moon.
3. Steam. We need someone who knows and appreciates how to run a server. In Gaben we trust.
 
Archaea said:
There needn't be a way to automatically get the money to the dead person's family if they didn't set that exchange up in advance. That's the way the cookie crumbles - as the saying goes.

Decentralized currency - no authority - take the good with the bad. If someone can figure out how to get that father the dead son's currency without knowing the private key (password), then that's a vulnerability for everyone else and the whole concept is broken.
Click to expand...

Sounds like Coinbase is involved per the OP's blurb? If so, it's their key, the bitcoin is essentially being held by them on behalf of the deceased son. It's up to them to basically do what they think is best in that case, which I am sure most would agree is passing on the son's property per his jurisdiction's probate laws.

If this was a cold storage and he left no instructions then yeah, nothing anyone could do even if they wanted to.

seanreisk said:
Most of the people who started the cryptocurrency craze don't want a government or bank to be in charge of their money, but with the current system there is no one who can establish rules that fall outside of an agreement of transaction, no one with authority to investigate wrongdoers, no one with authority to arrest and punish wrongdoers, or anyone who can act as a final arbitrator of disagreements. Finally, there is no one who can establish the bonafides of a currency. These might not seem important, but a 'society' is just a collection of rules that allow people to live together. Introducing any element that can operate outside of the rules of society is always going to be predatory. Think about that.
Click to expand...

The point of something like bitcoin is you don't need any of that. The transaction is confirmed by the network of other users (miners, nodes, whatever) and there is nothing to disagree on. There are no rules any 3rd party arbiter needs to make sure were followed, there is no trusted 3rd party needed at all. The system ensures whatever needed to go from point a to b, actually went there. In theory it's pretty cool. The issues arise from people hacking around the edges of the transaction--stealing keys, setting up fake wallets, hacking exchanges. The vulnerability is the human being doing the transaction, that is the vector for attack (usually). Stealing someone's property or defrauding someone is still a crime, it's just way easier to get away with it in this market currently. I agree that should be worked on. But doing all the other stuff you are talking about eliminates the point of the whole crypto coin market.
 
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Archaea said:
did you report your garage sale earnings?
what about your online purchases that didn't have tax applied?
no?

... criminal
Those items have been reported since their inception. Taxes paid when manufactured, taxes paid when originally purchased. No profit made when sold, if anything a loss. Your logic is so far off track on this example.
Click to expand...
Click to expand...
 
Nukester said:
Those items have been reported since their inception. Taxes paid when manufactured, taxes paid when originally purchased. No profit made when sold, if anything a loss. Your logic is so far off track on this example.
Click to expand...


Just like YOUR logic is so far off when it comes to crypto and the assumption it's a tax free criminal setup. You have no idea what it is, what it can do, or what it is doing. Just like every fuck stick who doesn't understand something, you automatically assume it's some criminal/evil thing.

Is it used for illegal stuff? Sure. But so is the US dollar. Why aren't we doing more to ban it's use since it's obviously the king when it comes to drug deals and arms deals? *eyeroll* If you are going to go full retard, at least have some consistency.
 
illram said:
The transaction is confirmed by the network of other users (miners, nodes, whatever) and there is nothing to disagree on.
Click to expand...

Electronic money is the future. Blockchain might be the best method of brokering transactions, but I doubt it - it's too slow. And bitcoin is fun to show off to friends, maybe once, until they find out how many places you can't use it. But if bitcoin grows to the point that people base their security on it, or major money firms start trading bitcoin for profit, at some point in the future it will have a crisis, and that's when we find out there isn't a person or entity to handle that crisis. Bitcoin's own webpage will tell you that it exists because it's popular; it is unsecured, and is not backed by anything. I heard an economist describe a market crash where bitcoin does what he calls a 'black hole,' and collapses under its own weight. As long as all the people trading bitcoins agree that a bitcoin is worth a million dollars, then it's worth a million dollars and it shines bright. But if the money traders cause a crisis and suddenly everyone decides it isn't worth anything, and people 'run the bank' to the point where it's untradeable, it could fall into a collapse where it can't be mined and no one can collect enough coins to justify a restart. Even though all the coins still exist.

(I'm looking for that paper - I can't find it.)

I'm not smart enough to know if that will happen, but I am smart enough to know that nothing equals nothing. I'm not saying bitcoin is a Ponzi scheme, but it does walk like one. It's great fun, you feel very futuristic if you know how to do a transaction, but it seems like it's a robot that someone made that runs around pretending to be money when in fact it's just a robot that says it can pay for things if asked.

In my county, which is in the United States of America, if you buy something from someone with bitcoin and they send you a box of dirt, the police will tell you there is no crime. Bitcoin is not a recognized property.
 
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so many peeps with no idea behind this, unless your wallet was stored in a specific place online, this would be akin to say "i know that my uncle had lots of US dollars somewhere, i have no idea where in his XX acres property but i know he had it, and i should inherit... give it to me US government!"

meaning, the coins are in a physical location not quite known for anyone but the departed and those he deemed to say... and if he had the wallet with him in his accident then they may be entirely gone.
 
seanreisk said:
This is one of the problems of cryptocurrency - there is no reputable institution behind it. There is no government or bank or authoritative industry backing the electronic currencies used.

Most of the people who started the cryptocurrency craze don't want a government or bank to be in charge of their money, but with the current system there is no one who can establish rules that fall outside of an agreement of transaction, no one with authority to investigate wrongdoers, no one with authority to arrest and punish wrongdoers, or anyone who can act as a final arbitrator of disagreements. Finally, there is no one who can establish the bonafides of a currency. These might not seem important, but a 'society' is just a collection of rules that allow people to live together. Introducing any element that can operate outside of the rules of society is always going to be predatory. Think about that.
Click to expand...
While your statement has some truth behind it, our current financial system is being handled increasingly irresponsibly that the appeal of existing outside is growing. If you put money in a savings account and simply wait, you will be poorer at the end of it. We almost crashed the economy in 2008 and our solution helped the people responsible and didn't get at the root of the problem. We're currently setting ourselves up for another crash due to lack of real regulation on financial institutions big enough to crash us again. We recently increased our future debt by 1.5 trillion. When adjusted for inflation, wages generally remain stagnant despite the increased of cost of living. If our economy was rock solid, cryptocurrency wouldn't have even half the appeal it does. It's value has endured because trust has eroded so much in our traditional systems.
 
Revdarian said:
so many peeps with no idea behind this, unless your wallet was stored in a specific place online, this would be akin to say "i know that my uncle had lots of US dollars somewhere, i have no idea where in his XX acres property but i know he had it, and i should inherit... give it to me US government!"

meaning, the coins are in a physical location not quite known for anyone but the departed and those he deemed to say... and if he had the wallet with him in his accident then they may be entirely gone.
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They were specifically talking about exchanges, where there's a full record of what you have there and the parent company could potentially access it with a court order.
 
rgMekanic said:
This is definitely a problem people into cryptocurrency need to think about. Things happen all the time, perhaps a safety deposit box with your wallet and instructions isn't a bad idea if you're holding quite a lot.
Click to expand...

With that suggestion, that story in 2014 about self-destructing SSDs is starting to seem a bit more relevant. Safety-deposit boxes in separate locations with cloned wallets seems like a pretty secure solution.
 
seanreisk said:
Bitcoin is not a recognized property.
Click to expand...

LOL. Tell that to the first person who goes to jail for tax evasion when he doesn't report his multi million dollar gains from bitcoin sales. And trust me, there will be someone going to jail over it.
 
Well, here's the cynical part of me.......
father calls kid crazy for mining Bitcoins and wasting his time......until they are worth something.......
now he wants them.
 
This really isn't an issue. First, no one should be keeping any amount of crypto in coinbase or any other online exchange for an extended period of time. If this guy knew what he was doing he can make it very easy for someone he trusts to be able to get access to his crypto after he dies. This is what I have done. God I hope I don't die.

But I guess most of you think this guy deserved to die since he bought your GPUs...
 
seanreisk

2014 IRS document:
See Question 8
https://www.irs.gov/pub/irs-drop/n-14-21.pdf

Simple tax advice
https://ttlc.intuit.com/questions/4175228

Oh and you might be self-employed and so have to pay another 15% on taxes
https://turbotax.intuit.com/tax-tips/self-employment-taxes/the-self-employment-tax/L8xXjolB4

so if you are middle class -- that's 25% taxes required for mining profits at time of mining the coin, + 25% taxes on capital gains taxes if sold in less than 1 year + 15% self-employment taxes + 10% electricity.

Enjoy your 25% remainer -- well that is until Bitcoin drops from 18,000 to 9,000 and your 25% becomes 12%.

OH -- and by the way - you can't charge for your time, only offset for your expenses (hardware, electricity)

yeah US government tax law!!! :mad:

The revolutionary war was fought over less than 10% taxes from sources I've read --- some say lower - like below (2-3%)...now we just accept these nonsense.
https://alibertarianfuture.com/big-.../tax-rates-under-king-george-compared-to-now/
 
seanreisk said:
This is one of the problems of cryptocurrency - there is no reputable institution behind it. There is no government or bank or authoritative industry backing the electronic currencies used.
Click to expand...
That's the idea. What makes an institution "reputable?" I find cryptocurrency reputable by the fact that it's been around for almost 10 years and no one has found a way to crack it.

Meanwhile "reputable" countries collapse and currency becomes worthless. As long as there is an internet and people use cryptocurrency, it will always be worth something.

The US's national debt has been increasing dramatically under the last 3 Presidents. "R" or "D" next to their name means nothing. How do you think the dollar will respond when the US can no longer pay it's debt and the country goes bankrupt? Our debt / GDP ratio nearly is reaching Greece's when it went bankrupt.
 
If it was a family heirloom I can see the point but it is not. It is greed.
 
sleepeeg3 said:
That's the idea. What makes an institution "reputable?" I find cryptocurrency reputable by the fact that it's been around for almost 10 years and no one has found a way to crack it.

Meanwhile "reputable" countries collapse and currency becomes worthless. As long as there is an internet and people use cryptocurrency, it will always be worth something.

The US's national debt has been increasing dramatically under the last 3 Presidents. "R" or "D" next to their name means nothing. How do you think the dollar will respond when the US can no longer pay it's debt and the country goes bankrupt? Our debt / GDP ratio nearly is reaching Greece's when it went bankrupt.
Click to expand...

This scares me, because I know EXACTLY what happens to us peasants! Gov't couldn't careless!
 
Sparky said:
If it was a family heirloom I can see the point but it is not. It is greed.
Click to expand...

Weird statement. If someone found out their deceased family member owned a bunch of Apple stock, would they be "greedy" for claiming it ?

Bitcoin is really no different. It's an asset. Just ask the IRS.
 
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I have mixed feelings about this. I don't want to enable government intervention that will open the door for agencies to have ultimate control over the currency. Little steps like this are going to allow the government to get a foothold in monitoring, or even managing transactions. I have an investment only wallet I put in a safe deposit box for my son last year with all the instructions for cashing it in if I were to die. I feel like people really need to make their own protocol for disseminating their funds should the inevitable come early. Even though the fast amount of my crypto that I routinely trade and play with is innaccessible to anyone else, at least a portion of it will be available to him someday (surprisingly it's enough to pay for college already).
 
Ok, I have failed to communicate ... I never intended to say that bitcoin is not recognized as property anywhere, I only meant to say that the police in my area have declined to investigate any fraud involving bitcoin because 'it isn't real money', which isn't true, that's just the excuse they're using. The real issue is that they aren't sophisticated enough to mount such an investigation, and they have no one to turn to for help.

sleepeeg3 said:
That's the idea. What makes an institution "reputable?" I find cryptocurrency reputable by the fact that it's been around for almost 10 years and no one has found a way to crack it.

Meanwhile "reputable" countries collapse and currency becomes worthless. As long as there is an internet and people use cryptocurrency, it will always be worth something.

The US's national debt has been increasing dramatically under the last 3 Presidents. "R" or "D" next to their name means nothing. How do you think the dollar will respond when the US can no longer pay it's debt and the country goes bankrupt? Our debt / GDP ratio nearly is reaching Greece's when it went bankrupt.
Click to expand...

Here we're getting to the real meat of my point, though. You're claiming that bitcoin is better than dollars because the US national debt is out of control and we're about to devalue our currency. But that's MY point. The US dollar is a valid currency because I can look at the actions of the issuer, look at the economic factors that are backing the dollar, and make a decision about whether to hold US dollars or invest in something else.

I can't do that with bitcoin. No one can. How do you value a currency when the entire strength of its value is based on popular opinion? Do you remember the dot.com bubble from the late 1990s, when people were creating every kind of stupid internet business to sell nothing to no one? There would be three people and a desk in a garage with no product and no plan, issuing an IPO and becoming millionaires, and it was based on NOTHING. People were making money, but no one was making money through goods or services. Companies were valued in the tens of millions, but nobody had any assets, nobody had any customers, to get market value internet companies were going into deep debt to pay for advertising for a product that didn't exist and getting loans based on the value of stock that had nothing behind it.

It was the emperor's new clothes. It was nothing, and the dot.com boom lasted until enough people realized that it really was nothing, and then it all tanked.

I'm not saying that this will happen to bitcoin. What I am saying is that if it does tank (and it certainly has the means, the potentiality and the ability to tank) there is no responsible issuer to be blamed, and no assets to be drained for the lawyer's pleasure. And anyone who says it is certain to succeed because it is beautiful and wise and wonderful and that it is the full-banana-of-satisfaction-for-the-future can only say that because they really hope (in their deepest My Little Pony Treasure Chest of Hopes and Dreams) that this is true. Because Bitcoin will tell you, on its own website, that bitcoins are backed by nothing, and the value [sic] "goes hand and hand with the trends and whims of speculators."

I'm still big on electronic currency. I have .04 of a coin on core, and I'm not selling it. I enjoy having it, but I also know my life doesn't depend on it.
 
DTN107 said:
From intuit:

"Received an inheritance of cash, investments, or property? ... Inheritances are not considered income for federal tax purposes, whether you inherit cash, investments or property."

Though I think on the state level, an inheritance is taxable.
Click to expand...

The feds tax the estate, not the inheritance. Which just means the estate is paying the tax before distribution rather than the inheritor paying it after. And of course there's a a large exemption for estates (no tax on the first 5.6m per person).
 
odditory said:
Weird statement. If someone found out their deceased family member owned a bunch of Apple stock, would they be "greedy" for claiming it ?

Bitcoin is really no different. It's an asset. Just ask the IRS.
Click to expand...

or an income, or hey --- let's make it both!

Frankly, it's whatever makes the IRS the most money in taxes!


Simplified tax instructions for crypto

https://ttlc.intuit.com/questions/4175228


IRS publication on crypto

https://www.irs.gov/pub/irs-drop/n-14-21.pdf

Question 8 in the previously linked IRS doc says it's an income...



63D2DD3294DC1D509FC49586560FEAA617195712
 
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