By Ben A. Neiburger, Attorney, Generation Law
Ben’s Trip to the Las Vegas Bitcoin Convention
Just after Memorial Day, Ben Neiburger attended the Bitcoin Convention in Las Vegas (Ben’s triathlon coach said he should climb a couple of mountains on this bike in preparation for his 3000 mile Race Across America bike race on June 14, so Ben really went for training, but attended the conference anyway).
35,000 people attended the conference, which is evidence that Bitcoin is starting to become a mainstream investment/currency.
Bitcoin is a decentralized digital currency that you can buy, sell, and exchange without an intermediary like a bank. An anonymous person or group of people using the name Satoshi Nakamoto created it and introduced it in 2008. Cryptocurrencies like Bitcoin are digital assets that rely on an encrypted network to execute, verify, and record transactions independent of a centralized authority such as a government or bank.
At the convention, many of the speakers and the vendors were using cryptocurrency to facilitate cross-border payments without fees or middlemen. Speakers were espousing using it as a store of wealth and as a hedge versus inflation on the US dollar. For example, if the US government drastically increases the money supply, the value of the US dollar goes down. However, Bitcoin’s limited supply prevents devaluation and, in theory, maintains its value. Of course, this mythical currency derives its value solely from another’s willingness to pay and the attendees firmly believed this would always be the case.
Many people at the conference are using Bitcoin as a savings mechanism and for wealth preservation. There is an estimated $2 trillion invested in Bitcoin. Bitcoin feeds the ethos of many convention goers that, with Bitcoin, “no one can take your assets away from you”, helps promote the individual independence from any government, and protects against inflation in your investments. Only History will tell whether this is true.
The one thing that was missing from the conference speakers and vendors was how you do estate planning with Bitcoin and other cryptocurrency? This harkens back to people burying gold coins in a strong box in their back yard or having lose diamonds in a safe deposit box. Like with these assets, the value is in who physically (or digitally) holds them. There was no acceptable answer to the what happens to cryptocurrency when someone dies. There was no answer on how to protect it and make sure it transfers to a new generation in the way that the owner wants.
The estate planning components will become more and more important as this currency matures as an investment that makes up a larger portion of a people’s net worth.
Stay tuned as we come up with planning options to tackle the thorny issues that estate planning for cryptocurrency raises.
If you have questions about that in the meantime, please reach out to us.
