First, let's consider a question: what kind of assets can you truly control? Assets such as bank deposits, stocks, and bonds are essentially custodial contracts that you cannot truly control. Real estate, as a type of immovable property, also carries the risk of forced auction. Precious metals like gold and silver can be held, but they are inconvenient to carry and store, and not easily controllable assets.
Cash, compared to precious metals, is more convenient to carry and, unlike securities, can be physically held. However, centralized cash relies on the credit of central banks and in extreme cases, it could become worthless, like the German mark or the silver yuan during the Republic of China era, or even be declared invalid by law.
Currently, only cryptocurrencies are truly owned by the private key owner. Note that I am referring to the private key owner. In theory, no one can access your assets except the key owner. As long as the private key is not disclosed, even the law cannot forcibly seize the assets.
The decentralization of cryptocurrencies ensures the reliability of the assets. However, none of us knows what will happen tomorrow, so it is best to plan ahead and have a will and inheritance plan in place to mitigate risks. So how can we safely transfer cryptocurrency assets to designated heirs?
If you give the private key to the heir in advance, the assets will no longer belong solely to you. If you include the private key in a will, how can you prevent the will custodian and notary from stealing the assets?
Currently, I know of several ways to transfer cryptocurrency inheritance:
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Encrypt the private key and store it in the will, then inform the heir of the decryption method. This method is somewhat cumbersome and not very secure, as the security of the private key encryption method determines its safety.
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Use multi-party computation (MPC) technology to divide the private key into multiple parts and distribute them to different inheritance recipients. This method has relatively high security, but I am currently concerned about the lack of a mainstream MPC algorithm. I may write a separate article to introduce this method in the future.
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Use smart contracts to automatically handle inheritance. This is the project I will be implementing, and I will provide a detailed explanation of this method later.
Smart contracts are code running on the Ethereum blockchain. They function similarly to traditional contracts and can automatically execute agreed-upon terms. Conceptually, a smart contract is a piece of code compiled into instructions on the blockchain, running on every node. It is open and transparent to all users, eliminating the need for trust agreements. This makes transactions more secure and reliable.
Smart contracts have a wide range of applications, including finance, healthcare, supply chain management, and various other industries. The most typical application is token issuance. Developers only need to write smart contract code and deploy it on the Ethereum network, and the tokens will automatically operate according to the predetermined conditions, greatly reducing the difficulty of token issuance.
Other applications include proof of existence, voting, insurance, and executing wills.
The concept of smart contracts was first proposed by American cryptographer Nick Szabo, but it was not realized until the emergence of the Ethereum network. Ethereum, through the design of the developer-friendly programming language Solidity, makes it convenient for developers to develop and deploy smart contracts. This has greatly promoted the development and popularization of blockchain technology and smart contracts.
In summary, a smart contract is a type of code based on blockchain that can automatically execute specific tasks. It is transparent, secure, and widely applicable, with great potential to change traditional business operations. With the development of blockchain technology, smart contracts will undoubtedly have a more profound impact in the future.
The content of smart contracts is too broad, so this issue only provides a brief overview. In the next issue, I will use AI to assist me in implementing a real cryptocurrency inheritance smart contract project.