#240 Pamela Morgan: Cryptoasset Inheritance Planning

Transcript

This episode of Epicenter is brought to you by DappCon. DappCon is a two-day developer conference organized by Gnosis taking place in July 19th and 20th in Berlin. The conference focuses on decentralized applications, tooling, and scaling solutions on Ethereum. Go to dappcon.io to get your ticket today. Hello and welcome to Epicenter, the show which talks about the technologies, projects, and startups driving decentralization and the global blockchain revolution. My name is Brian Fabian Crain and I'm here today with Pamela Morgan. Pamela Morgan is an a lawyer and she's also the founder of Empowered Law, uh of a kind of blockchain security company called Third Key Solutions. And

most recently, uh she's written this book uh called uh Crypto Asset Inheritance Planning, which is going to be kind of the main main topic for the show. Um yeah, so thanks so much for being on the show, Pamela. Thank you for having me. I'm really excited to to chat with you today about all things inheritance planning. Right. So, this is probably this is actually kind of an unusual episode, I would say. Mostly, you know, we sort of try to explain complex technical concepts or the sort of the the next big ideas in crypto and and they these are like sort of seemingly straightforward and and trivial, but, you know, practically very

very important and very relevant things that we're going to speak about. And probably things that many people also can take away some some actionable stuff that they they can can do today or or this week to actually improve uh improve kind of how maybe is a sense of security, how they feel with their crypto, but also um looking out for for their heirs in case something terrible happens. Absolutely. So, maybe we can start there. Like, how did you first become involved in Bitcoin and cryptocurrency?

My origin story starts as so many others. Um I I was actually speaking at a at a conference, not about Bitcoin. I was speaking at a conference called Disrupt, Startup, Scale Up. And at that point, I was teaching entrepreneurship. I was teaching um entrepreneurship professors how to teach an entrepreneurial mindset. So, that's like pretty meta. Um but, I loved my job. I was traveling the world. I was teaching people. I felt like I was really making a difference.

And I was at this conference, and many of the other speakers were um not so disruptive. Their ideas uh were pretty boring, to be completely honest. And I was like, "Oh my gosh, really? This is disruption?" And then, Andreas Antonopoulos got on the stage, and he started talking about Bitcoin. And I was in the audience, and I remember just being mesmerized, thinking to myself, "If half of what this guy says is true, this technology might actually change the world." And so, I was super inspired, and I left the event, and I studied Bitcoin for a couple of months.

And then, I decided that I was going to quit my full-time job, and I was going to make a career in Bitcoin. And that's what I did in early 2014. I started practicing law specifically for Bitcoin and open blockchain companies, and I've been doing that ever since. Best decision I ever made. Leaving a full-time job to work in Bitcoin and and open blockchains full-time, absolutely recommend it. And then of course Andreas, uh yeah, absolutely such an amazing speaker and and I think the way he's able to convey some of the ideals and and values around blockchain and inspire people to get involved in the space is

pretty unparalleled. So, I I can imagine that that conversion experience, how that happened. It was really I I feel very fortunate to have been in the audience and to have been in a position to actually hear what he was saying. Meaning that, you know, so often in our lives we're not really in in a position to hear these sorts of things and then you start to listen to someone talk about a message of hope and genuine change and presenting this this technology that actually has the capacity to change the way that we interact with one another. And, you know, I was I was ready for that. You know, the the conference of disrupt, I was like, yes, let's disrupt things, let's make a change. And so, it was a really it was it was a good time and it

was a good message and and I'm very fortunate that I was there. Great. And so then you you're a lawyer, right? And you say, okay, I want to work in or you still are, right? And then you say, okay, I want to work in this cryptocurrency Bitcoin blockchain field. So, what what did you first do then? Well, so at that point um it was early 2014 and there were a lot of startups in the space like there are now. But then, there weren't a lot of lawyers who were helping these startups. Um most of the startups, you know, can't really afford or don't want to seek legal counsel. And so, um but they do need some sort of protection often. And so, I was helping startups who kind of wanted an alternative perspective on understanding

what their risks are and what their options are. Um I I don't tell my clients what to do. That's not my job. My job is to explain what the options are and what the risks are and help them make an informed decision. And at the end of the day, it's whatever you want because it's your name on the line, right? And so, a lot of startups found that perspective to be refreshing. So, I was helping startups who were managing cryptocurrencies and at that point, there were a number of stories of CEOs who would get funding in Bitcoin and then um get hacked or mysteriously run away with all of the funds. And I was like, why is this

happening? There's, you know, there's this multi-sig feature. There's this multi-signature feature that's built into Bitcoin. Why aren't people using it? And then I realized why. And the reason is because it was super hard to use. There weren't any nice like Copay interfaces. There weren't any of that. And so, I started helping companies not only, you know, prepare their legal documents, but talking to them about how to secure their funds. And I was asking all of the smart people that I had I had talked to uh in the industry, like, "Hey, can you help me do this? Can you help me do this?" And a number of them said yes. And one of them spent a ton of time helping me kind of develop these these processes and that was Andreas.

And so, he helped me with the technical side of the multi-signature implementation and I worked on the process side. So, um what many of of your listeners might not know is that multi-sig is more than just the tech side, right? Um and we learned that, you know, when BitPay got phished. We learned that over and over again that like, okay, being able to click a button and sign a transaction isn't really necessarily what's going to keep you safe. And so, I worked on the process controls. Andreas would help out with the technical when I needed it. And that's actually how Third Key Solutions came to be.

Because that's not really practicing law, right? I mean, helping people come up with corporate governance and and processes around how they hold their cryptocurrency safely in their companies or even as individuals, that's not really practicing law. It's much more of a consultancy kind of practical hands-on application. And so that's how and why we created Third Key Solutions. Yeah, I I I can I can well imagine that, right? Cuz multi-sig probably again to many listeners it sounds like this obvious thing, okay, now you have just two people signing it. But then to think through things like okay, you know, what happens if one guy you loses the keys or or there's some backup or how

now you have multiple people and maybe one leaves the company, how do you switch? There's so much complexity around it. Exactly. And the thing is is you don't want to be making these processes and policies, you don't want to be thinking about this for the first time when it happens, right? So like when the key is gone, you don't want to be having an emergency meeting like, "Oh, so-and-so has resigned from the company and you know, how are we actually Do we need to move the funds? You know, how how are we going to move them? When are we going to move them? Are we, you know, creating a whole new multi-sig address?

Like what is the actual process?" And you want that in place before it's like emergency time. Great. So so in in in all of these cases you've done at Third Key Solutions, can you give an example of maybe like one which is a simple but typical case uh case story and and let's say one that's a you know, very unusual and interesting one that uh you know, that you found particular memorable? Sure. Um so I have to be kind of vague about this. Uh so the stories might not be so great because we have confidentiality, right? So we don't share generally who our clients are. Um and so I have kind of have to keep that private, but but I'll do my best. You

know, um for Third Key Solutions, our standard clients are uh startups. Um, generally we only work with startups. We are approached by a lot of different companies. Um, last year was the year I call it the year of the hedge fund. Where pretty much every week we were getting two and three requests for people who wanted to hold uh cryptocurrencies in their hedge funds, and they wanted to do it securely. So, that's kind of, you know, what are the organizational processes to do that? And, you know, pretty much I'm breaking hearts all across the world when I tell them that there's really not a lot that you can do as a trusted third party, right? You know, you you

can mitigate the risk, you can have best practices, but at the end of the day, I'm a big believer in having people manage their own keys. I think that's one of the main promises of Bitcoin and cryptocurrency, and I think that's one of the ways we actually do change the power structures, and not just change who's in charge of the power structures, to be what a lot of people are kind of moving to in our industry. So, um, you know, there there is a lot of organizations that really really want to hold cryptocurrencies for for other people, and obviously that's dangerous. Um, they become a honeypot. It's dangerous for the company, but it's also dangerous for the people who are trusting these third parties to to hold their crypto.

So, a lot of times we, to answer your question, a lot of times we have these these organizations come to us, and they want us to help them implement um policies. I've actually written a few articles on this, and there's one in particular that um people might find useful. Uh it's called disaster recovery planning, and I believe it's on the Third Key Solutions website, but it goes through step-by-step, and asks all of the questions, even not all of the questions, most of the questions that I would ask you if you hired us to help you with your organization. Um, and they're a lot of the questions that that you brought up earlier, right? What do you do if there's um if there's a breach? What do you do if someone loses their key? What do you do if a principal

leaves the company? And that is a kind of a a tool so that people can start to develop these practices on their own and not have to hire uh someone like me because uh we don't scale. We are a a boutique firm. To move into the individuals, um this kind of came about organically, where we were helping the startups. And you know, we were helping them secure their cryptocurrencies, and then inevitably I would ask the question like, "Okay, um how much of your net worth is being held in, for example, Bitcoin?" And they would look at me as if I was stupid, and they would be like, "Uh all of it."

And I'm like, "Okay, cool. So, if something happens to you, do you have people that rely on you? Do you have a family? Do you have children? Do you have parents that you need to support? Are there people who rely on you who would need or really, really benefit from um these assets if something were to happen to you?" And then they're like, "Well, yeah." Okay, well, then the next question is how are they going to get them, right? Have you made a plan, or are your private keys so private that access dies with you? You know, an another point I think that's relevant is that it doesn't just have to be death, right? It could be you have an accident and, you know, you're in a coma or you're have surgery or something like

that, and maybe your family needs access to those funds to pay um your medical bills if you're in the US, they do. If you're anywhere civilized, they don't. Or maybe they do. Maybe I don't really know. But, you know, the the idea is that uh estate planning and inheritance planning isn't just for, you know, the your your demise. Um it it can be for all sorts of other, you know, issues. You mentioned before the show, and and also here, right? Like the the Third Key solution doesn't really scale and you guys are like full inundated with requests, can't take more clients. So, why not hire more people, scale the company? Cuz obviously this is needed and needed at

you know, at a large scale as the industry is growing. Why not pursue that and and scale that? One of the reasons that I left my former employment, one of the benefits of being an entrepreneur, one of the things that I value is creating my own success. And I think it's important that people like define what success means to them. Um for me, it's not a Lambo, which I do not have and do not want and could not afford, but that's beside the point. Um for me, um success involves a lot of freedom.

It involves freedom to travel. It involves freedom to work with only people that I want to work with. Uh it involves me working on projects, only projects that I think are benefiting the world. For me, that's what I care about. And so, in order to scale the business and in order to, you know, take all of these clients who who want to hire us, we would have to work with people who um not people who I don't care for, but on projects that I don't think are making the world a better place, right? And so, and it's totally subjective and it's completely unfair.

And that's how life is. So, you know, we don't want to scale Third Key because we're very interested in working on specific problems that we think we can provide ultimate value to and we prefer to scale in education. We prefer For example, that's one of the reasons why I wrote this book. It's because the way that we want to scale isn't by taking on more and more clients, but it's by providing educational resources to people so that they can be empowered to kind of educate themselves and do this sort of work on their own. And then, when they need that extra help, when they need to go that last 20%, then they can hire someone who really needs them.

That's the honest answer. No, that makes perfect sense. Yeah. Uh also, my CTO has a lot of other things that that he likes to do. He's got a lot of other work happening. Um for those of you who don't know, Andreas agreed to be the CTO of Third Key Solutions. And so, I promise you he would much rather be writing books uh like Mastering Ethereum, which is I think what he's doing right now, um instead of kind of working on on these projects. So, we both have a lot of outside interests. Um I also spend a lot of time training lawyers around the world because I love to teach. And so, I teach lawyers about this technology and what they need to know. So, neither one of us really want Third Key Solutions to be kind of full-time 100%.

Well, I'd love to actually hear more about that point. So, you mentioned that also before the show. So, you you do a lot of teaching of lawyers and that there was a lot of misconceptions that lawyers have about, you know, cryptocurrencies and crypto assets. Like, what are those misconceptions? There is a fun There are many, many, many um illustrations of how much misinformation is out there. But, let me let me give you an example. So uh I've been I've been training lawyers now in this technology, giving legal workshops around the world for about 2 and 1/2 years.

And my legal workshops don't involve teaching lawyers about the law because they're lawyers. They understand what the law is, right? What they need to understand is how this technology actually works, how it's working today, and kind of um understand like what questions they need to ask, how can they tell what's {quote} {unquote} hype versus, you know, kind of what's what shows some promise. And um So, let me give you an example of the kind of other training programs that are available out there for lawyers.

So, I want to say this is like December of this past year. Um I get an email and it says continuing legal education Bitcoin and taxes in the US. And I'm like, all right, I need continuing legal education credits. For those of you that don't know, um many jurisdictions require lawyers to continue their education so that they learn new things. Um and I'm licensed in one jurisdiction that does require CLE and one that doesn't. So, CLE is continuing legal education. So, I was like, all right, I need these credits. I'm not a tax expert. Let's see what this person has to say. And as I'm listening, it's becoming painfully obvious that this

person has zero experience with cryptocurrency. Like none. The way that they're speaking, what they're saying, it's all highly suspect. So, we get to the question part and I just pose a very simple question. I said, do you currently or have you ever owned Bitcoin? Because your entire program is based upon the premise that you're going to tell us You know where this is going, right? So, he sheepishly looks up at the camera and is like, I was hoping no one would ask this question. No, I've never owned Bitcoin.

And I was like, oh my gosh, this is the current state. This is what is happening. This is the education for lawyers that that is going on out there. And it's just I mean, I can't even. Like I I I can't even. I don't even know what it takes to hold yourself out as an expert in a particular area when you actually have zero experience with it. But that's just one of the ways that lawyers are are being completely misinformed. I recently read an article, um very recently actually, and it was uh written for lawyers about the blockchain. And it was riddled with misinformation. Um including but not limited to how, you know, blockchains all have encrypted

information and they're all immutable always and forever. Once you put your data on a blockchain, any blockchain apparently, there's no way to change it. And I'm like, okay, again we have a big misunderstanding of what this technology actually is. So I wrote to the author. Which is something that I do. Um my colleagues were horrified. They were like, wait, so you wrote to the author who said something wrong on the internet? And I was like, yes, I did because I care. And if this person is taking the time to try to educate people and lawyers, I want them to have good information. So I did it really nicely, like as nicely as possible. And like,

obviously, you care about this. Anyway, turns out that the author was super happy to hear from me and wants to do a collaboration in the future. So and they're going to try to get the article fixed. So this is a good This is a This is a a warm fuzzy ending. Um unfortunately, most of them do not end that way. Cool. Yeah, I mean I can I can I have some experience also with, you know, the challenges of trying to work with lawyers on on these topics. Do you think it's going to improve? I do. I hope. I I mean, I I think we need it to improve. I think that, you know, there are a lot of lawyers out there

who are tired of the status quo. I I think there are a lot of lawyers who recognize the inefficiencies that are out there and who, like me, want to actually make a difference and kind of want to build new systems that serve people in new ways. I don't know if they solve all the problems. In fact, I would argue that they don't, right? As we change systems, there are new problems that are that are introduced, but um you know, I'm very interested in kind of changing the power imbalances that are out there and and and seeing, you know, what happens when we actually have control of our money. What happens when we actually have real control over our data? What is What does our society look like? What does human interaction look like? Cuz that's what I actually care about. And I think that there are a lot

of lawyers who do care about that stuff, too. Now that said, there are a lot of lawyers who care about making money and only about making money. And so, you know, there there is this balance just like in corporate America or corporations around the world, right? Um there's there's this balance between how does the technology that we're building and how do the systems around this technology that we're building um empower people versus, you know, to what level is it just about making money? And I think that you can do both. Right? I don't think making money is a bad thing. I just think I for the projects that I work on, I don't want it to be the only thing. And I think that there are again, there are a lot of lawyers out there who share those values. Um they might not be the most vocal. And, you know, I I'm

working to build that community. Fantastic. Well, now let's move on from lawyers to sort of the regular crypto users that, you know, have actually experienced. They hold some some, you know, Bitcoin or ether or any other assets. Like what what are you What are the most common mistakes that you see people make when it comes to holding, managing their assets? So, I think the number one mistake is leaving your money on an exchange. Uh and I know that, you know, we've all heard this over and over again, right?

Not your keys, not your money. Um but I think that the danger of leaving your money on an exchange is under appreciated. And I think one of the reasons for that is because we trust banks with our money. And so, to trust a third party with our crypto for many people seems like a natural thing, especially if they have warm fuzzy things like insurance, right? If they say that your that your deposit is insured, or if they're a well-funded company, um you know, people tend to kind of model that because guess what? They don't have time to do this full-time, right? I mean, most people that that own crypto are not going to spend their days and nights doing what I do, which is nerding

out about the security and and how do people hold keys and all of that sort of stuff. You know, people have other lives. And so, you know, in order to get people to stop holding their funds on exchanges or with third parties, we have to do better at providing um providing services that allow people to hold their keys directly, like hardware wallets, but we also have to do better at educating people on how to use them and making people understand that like guess what? Most of you actually can hold your own keys. Like it sounds scary, and when I talk to people who are, you know, less technical um in the way that they self-describe, you know, they're terrified about holding their

keys. They think they're going to mess it up. And so, they think that their that their funds are more secure with a third party than they would be with them. And so, I think that's that's the number one issue and at least in my opinion on, you know, the the dangers of of how people are not holding their own keys. And yeah, I I I want to see that change. That's an interesting point. I mean, it obviously over the history of Bitcoin or history of blockchain, right? There have been a lot of exchange hacks and and with enormous amounts and and lot of people have lost money uh doing that, but it seems like, you know, the the quality of exchanges has improved and and so the

security has improved as well. And and then at the same time there is, of course, when you manage your own money, also the risk of I mean, I remember years ago there was a story of this British guy who had uh 8,000 Bitcoins or something like that on a hard disk and threw it away and now it was in this giant trash bin or giant uh yeah uh uh Um so that's also a risk. So do you have like data or like can you kind of quantify, you know, how how those two risks compare and and has that changed in the last years?

I wish that I had data for that. I don't have data for that. Um one of the one of the things that I want to point out that is um an uh an under understood risk. In other words, a risk that we don't often recognize with holding our money on exchanges is that it's not just about the exchange getting hacked. In the US at least, um the exchanges have to run the sender of coins uh through some sort of um KYC AML. And you can get your exchange account frozen uh if the if the coins can't be traced or if the person who's sending them to

you, if they're {quote} {unquote} dirty coins, naughty coins, bad coins in whatever way, and the exchanges are are doing this. They're they're holding funds because they have to in order to remain compliant with US banking law. That said, very few people think, "Hey, I'm going to send my money to this exchange and there's a chance of it getting frozen." Right? Becoming inaccessible. And not just the coins that were sent to you. No, no. All of it. Your whole account. And so then you have to try and sort it out with the exchange and like how do you prove that someone sent you okay coins, right? Like how do you prove that these that that you're on the up and up? Um so what I'm

getting at is the same issues that we see in traditional banking systems are now rearing their ugly heads in our exchanges because they have to abide by the same laws. And so the risk isn't limited to simply, you know, the exchange getting hacked, although that is a risk. Um and I will agree with you. I think that exchanges have come a long way in developing, you know, cold storage systems and internal processes and like one of the things I like to say in in in my legal training programs is like we sometimes forget that this is like toddler technology, right? Like if you actually look at the grand scheme of things, Bitcoin was born in early 2009, right? It's not even a 10-year-old yet.

And so I don't think it's unreasonable that in the early days there were, you know, we were just still trying to figure things out and I think we still are trying to figure things out. I'm a big believer in holding your own keys, obviously, um because I think that that's part of the promise. I think that's part of the magic of Bitcoin and and other cryptocurrencies that you control. This episode of Epicenter is brought to you by DappCon Berlin. DappCon is a non-profit two-day developer conference that brings together the Ethereum community to learn, build, and think big around the topic of decentralized applications, tooling, and scaling solutions for Ethereum. The conference organized by Gnosis is taking place on

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Now, of course, I know what the what another mistake is going to be. Uh we assist the whole inheritance stuff. So, let's go into that in a second. But, can you give us one more uh one more mistake that you commonly see besides holding money on an exchange? As far as it comes to holding like your own security? Yeah, like crypto uh security on and securely holding crypto assets. Yeah. So, um and and this kind of rolls into inheritance, but um rolling your own crypto. So, um when people want to back up their their seeds, often what they do is they get paranoid because they don't want to write all of their seed words or their private keys down.

Um because they're afraid of someone finds them, they're going to steal all of their crypto. So, um one of the issues with that is that A, they would have to know what it was. B, they would actually have to understand how to steal it. And C, they would have to do it before you were actually able to recognize that that had been breached. And any of those things may or may not be true. Um but so, people get nervous about writing down their their seeds. And so instead of using something like advanced security, um, encryption passwords, or a passphrase, for example, on a hardware wallet device, instead of using those, they're like, "I'm going to take my seed and I'm going to cut it. I'm going to divide my seed words into If I've got

24, I'm going to do 12 and 12, and I'm going to give 12 to this person, and I'm going to give 12 to that person, and then, yes, I have successfully protected my crypto." And the problem with that is that you're actually not successfully protecting your crypto. In fact, it you it becomes um, significantly more risky uh, when someone has 12. Um, and also, there's a much better way to do it. You know, like I mentioned earlier, you could encrypt your passphrase, you could your password, um, you could use a passphrase. There are other ways to do it securely. If you really, really, really have your heart set on um, on splitting it and and moving it into, you know, different different uh, configurations, you should use something

like Shamir's Secret Sharing, which is intended to do this. And so, there are ways to do it, but one of the most um, common, you know, errors is that people don't understand those ways, and so they just start doing it on their own. Hiding seeds, cutting them up, um, in the book, I talk about my friend who who uh, I didn't know that she was going to get into to Bitcoin. She had contacted me um, after a long time and said, "Oh, hey, you know, what are you doing?" And I said, "I'm into, you know, Bitcoin and cryptocurrencies. That's what I'm working in." And so, unbeknownst to me, she went and bought some Bitcoin. And then some time went by, and I asked her

we were chatting, and she's like, "Oh, yeah, I bought Bitcoin." And I was like, "What?" Like, "Oh, okay." So, of course, I'm like, "How are you storing this?" And she's like, "Oh, yeah. And she like like she was so proud of herself. She's like yeah uh I got a I got the seed. Like I've been reading your stuff, but um I put the seed in a poem. And I put the book on my shelf. And I was like, oh my god, no. Um so, you know, even even my friend is just like she she thinks that the most secure way to to store the Bitcoin is to like put it in a poem, so no one will know. And the problem with that obviously is A, the likelihood is that she'll forget. Um and B, if something

happens to her, nobody is going to take that poem and start running it through and be like, could this be a Bitcoin seed? You know, so basically that Bitcoin is lost forever. Now, for her, it might not matter, right? It might just be a small amount. Maybe she doesn't care. Um but if Bitcoin goes to the moon, maybe that small amount all of a sudden represents, you know, a much larger portion of of her total net worth. Well, yeah, that that is a a very vivid example. Well, now let let's speak with the the the thing the the big mistake that you're trying to specifically address, which is inheritance planning and in thinking what happens, you know, if if for some reason you cannot no longer yourself

access those those crypto assets. What's Why is this a hard problem for people? Well, it's a hard problem for a lot of reasons. One, because no well, very few people that I know are excited about thinking about their own death. Right? Mostly you want to do anything other than that. Uh I did a I did a a poll on Twitter when I was writing the book, and there were four options, right? It said, for my inheritance planning, my current plan is and it was like, tech only, legal only, tech and legal and then immortality.

And 55% of people were going with the immortality plan. Um so, you know, the thing is is it's it's not a subject that we really want to deal with. And then the other big problem is most of us have never had to do inheritance planning before. And so it's this big unknown and it seems like this huge issue when you actually sit down to do it. And then, thirdly, if you go on Reddit and you ask I love you Reddit, don't don't don't think I'm about to slam you, but if you go on Reddit and ask about inheritance planning, which happens about once a week, what you'll hear is, "Well, duh, you just use a dead man switch." Or you just give your keys to your father and it's

fine. And so it seems like such a trivial problem, right? It seems like on its face it's like, "Well, I mean, obviously this is all I have to do." It's not until you actually start doing it that you realize that there's a lot more to it. For example, if you decide that you're just going to give your key to your spouse, right? How how and something happens to you, how do they actually go about doing anything with that key? What are they going to do?

We don't know, right? But chances are they're going to go to either your local meetup.com group or they're going to go online, uh maybe Facebook, and say, "Hey, we need someone to help us with the cryptocurrency." And you don't know who's going to come out of the woodwork and and help them with it. Um and so, I'm a big believer in helping your family identify some people who might be able to help them. It doesn't mean that you give them your keys. It just means you identify people who might be able to help walk them through the process, who know what they're doing, who are generally, you know, not jackasses.

That's not the criteria in the book, by the way. It's not like not a jackass. That's not. Uh there there are a number of different criteria in the book for you to find helpers, but yeah, I mean, it it seems like it's not a big deal, like it's not a big issue, until you start to sit down and and do it. That's interesting. So, you So, you basically said right on the one hand, it seems it's like big, hairy, really hard to handle thing, and then the other hand, people are like, "Oh, this is straight. We'll just do, you know, like no no no need to think about it much." Uh and I guess it's somewhere in the middle, in reality.

Yeah. I guess another thing that may be that may be an issue here, and I thought that was very interesting that you pointed that out in your book, is claim that, "Okay, most people, like we we tend to overestimate our own technical abilities, and we also tend to overestimate the technical ability of others." Can you Can you explain that, and and can you provide some maybe some evidence or some illustrations for how that is the case? Sure. Um so, it kind of goes right back into what we were just talking about. When we think about our heirs inheriting our our keys, we generally impute our knowledge to

them. And what I mean by that is, we know how easy it is to do a Bitcoin transaction, right? Especially if like you're using a hardware wallet, right? You just like, "You're using Trezor? You just go to the website, and plug it in, put in your PIN, put in your passphrase, and call it a day, right? Easy." Um and so, often we forget what it was like when we're learning new technology. And so, we overestimate our heirs' ability to do all of those things that we kind of do on a daily basis. And the danger in that is not that they can't do it. Of course, they can learn it. The danger is that at the time they're learning it, are they going to be grieving?

Are they going to be in a terrible financial position because they don't have money to pay for, you know, the bills that are coming in? How much of your, you know, how much of your crypto assets, you know, represent your net worth? Is this something that your family would actually need in order to make your mortgage payment? And so, you know, they're not that is not the time that they're going to be like, "Yeah, I'm about to learn how to use a hardware wallet." No, that is not what's actually going to happen. And so, um by acknowledging that and understanding that, you know, it doesn't mean that they can't learn it and it doesn't mean that in the interim, right? So, you make a plan now.

You can start working with your loved ones on what is it like to access keys? What is this, you know, I have some clients who have actually used the book and and before the book went through their plan with their spouse and had their spouse write their letter. So that they so that they knew where are these things located and they could verify, right? Because when the spouse is doing it themselves, then you have confidence that, you know, the questions come up then when you're still around to answer them.

Um when I talk about, you know, how we overestimate our own technical abilities, um I I I'm kind of referring to the idea of cutting up your seeds or trying to roll your own crypto, that sort of stuff in that we don't realize that that's actually making us less secure. We feel like it's more secure and to be honest, it's cool, right? Like when you're doing that, you feel like, "Yeah, I got this. I am under control, right?" And so, at least many of the people that I talk to are very proud of themselves and very excited about the idea that like they can make themselves more secure. And so, that's why I talk about, you know, maybe not having a good understanding of the technology behind it and what actually results in in more security and less.

Yeah, I can also give an example of of this point. So, you know, years ago when I started becoming interested in Bitcoin and all my mother also bought some Bitcoins. And, you know, they were on some paper wallet exchange. I I don't remember. But then I I got them a ledger, right? I was like, "Okay, it should be transferred to this ledger." And then I was I was basically first of all just a transfer, right? From paper wallet to that ledger, it was very complex, right? Because we had to like import that in some wallet and then somehow also get the Bitcoin cash and then there's Bitcoin gold and like split that up and and then and then you could only do that with another wallet, not

that first one. And then even in the ledger I realized cuz I've been used to using it, so I kind of understood how how to use it, but it I was actually incomprehensible. Because, you know, you you open in this Bitcoin wallet and then it says, "Do you want um Bitcoin or Bitcoin cash, right? And then legacy or the SegWit chain?" And then, you know, they would ask me like, "What does that mean?" And even to explain this, it it was extremely hard. And I also realized I didn't fully understand actually how it was working underneath.

And it was and it that really made very obvious to me just how nightmarish uh the user experience was of this. Yeah, I'm sorry that that you had to experience that, but that's a great story. It it really does illustrate, you know, many of of the problems. And you know, you talked about forks, but this is one of the dangers of having, you know, just one helper come by or even not designating someone to help your family. Like, okay, they could seem like they're totally on the up and up, right? Oh, yeah, I'll help you get the Bitcoin." And then never mention any of the forks and kind of pocket that as a finder's fee, right? And so you really need to have someone who A, understands that those forks happened and

understands whether or not, you know, those keys entitle you to to claiming those. Um but but then also, how do you effectuate that transfer? And that's it that's exactly it is, you know, and you're in this industry, right? So, yeah, I love that story. Okay, now in the book you you clearly make a lot of attempts and and I think you do a good job of it showing manageable, pretty short, concise, you know, simple steps that people can do, you know, in the hope that they will actually actually take some actions. In particular, there's this get-it-done plan, which I think I guess will take around maybe 2 hours or something or maybe a bit more to complete that. Can you walk us

through that and maybe it will actually be enough so that some people can can take action and actually implement that first step? Absolutely, I'd love to. So, this get-it-done plan actually came out of the work that we've been doing at at Third Key Solutions with our clients. And before I wrote the book, I've written a couple of free articles. They're available on Medium and I think that you'll have links to them, I'm not sure, but one of them is uh inheritance planning in 3 minutes. So, you know, take 3 minutes and do this. Uh which I think is a little more doable um than you know, a couple of hours. And then next is a letter to your loved ones. And

I actually have the letter to your loved ones um in the book and that is the the essential part of the get-it-done plan. So, the idea is you leave a letter to your loved ones that says, "Dear loved one, if you're reading this letter, it's because I want you to know that I have crypto assets. These assets are not like other assets. In other words, you don't want to trust anyone to handle them for you. You need to watch people carefully, etc., etc." And then basically, you first you identify some helpers who might be able to be there and and and help your family. And there's a whole process, you know, in the Get-It-Done Plan to kind of help you evaluate who might be a good good who might be good people. Um I don't advocate having just one person,

unless, you know, your family situation or or your situation is such that you trust this person 100%. And for those who do have those people, I do not want to be a Debbie Downer when I say this, but uh relationships and people change over time. In law school, when I when I was in law school, I was married at the time and I was getting divorced. And I went to my law school and I was telling the the counselor person about it because I needed a a day off and I would needed to make sure that everything was okay. And this person said to me, "Oh, do you have a joint bank account?" And I said, "Yeah, I do."

And she said, "You need to go to the bank right now and empty all of the funds." And I said, "What?" And she said, "Yeah, well, legally, this person is entitled to all of those funds and now it's just a race to the bank to see which one of you are going to go first. Which one of you are going to empty these funds first?" And I said, "That is a terrible idea. Um that is a way to drag this out, you know, we're we We know that this is what we want to do. Everything is cool, like, you know, we're we're both good with this decision. Like, this is a great way to start a war. This is terrible advice." Um and I think that a lot of people get this same sim- like this similar advice, right? When your relationship becomes troubled, when, you

know, they're they're they're told, maybe friends and family give people bad advice like, "Oh, you should go and take all the Bitcoin." So, I'm not saying that you shouldn't trust your spouse, and I'm not saying that, you know, I'm just saying remember that relationships change. And people change. And so, keep that in the back of your mind when you're doing this kind of inheritance and estate planning. One of the things that you need to do when you're doing these sorts of plans, it's it's unfortunately, it's not like a set it and forget it. Um it's something that you need to keep fresh. It's something that you need to do, you know, kind of revisit maybe once a year um or more often.

But, all of that to talk about helpers, right? The idea is you need someone there, even if your spouse does know how to access it, you'll really want to have one or more people there to help them, kind of walk them through. Because it's not just about them accessing the Bitcoin. It's about how do they liquidate it? How do they open an exchange account? How much should they open? Where do they put it? Are you separating this into, you know, is more than one person inheriting it? All of these things. And guess what? None of this is anything you have to think about in the Get-It-Done plan.

All you have to do is designate, you know, who might be around to help, what your assets are, like what what coins are you currently holding. And, you know, do you have to list every single shitcoin that you bought? I'm sorry, altcoin that you bought? No. You know, just list the ones that are that come to, you know, the front of your mind. List the ones that you really really care about. And then explain where they're being held. Um and when I say where, I don't mean give the address. I mean, say, "Okay, I'm holding this amount on a ledger. I'm holding these coins on a ledger." And the reason is because your helper is going to need that information in order to be able to access all of the assets.

Often we think of, you know, these these keys as being static, but just think like 2 years ago, how many altcoins was Ledger or Trezor or any of the others, how many were they supporting? Almost none, right? And now they're supporting coin upon coin upon coin and you have all of these multi-coin assets. They will at some point stop supporting some of these coins, I anticipate. And so you need to kind of have um direction for your helper if you want them to access all of those coins.

So the get it done plan is basically just writing your letter. It's telling them who might be able to help, what your basic assets are, and where they can find the the um your seeds or your access codes. Right. So then you also had, I think, select a storage location, right? So so you have a location where you put this letter, I mean, let's say safe at home. And then and then you have in that letter a list of people who are trustworthy and uh should presumably know know about cryptocurrencies. And then and then a list of assets, where they're held, as well as where the backup seeds and recover phrases are.

And those then would be at a different location, maybe a bank safe or something like that. Or or what do you have in mind for that? Yeah, absolutely. I mean, a bank safe is fine. Um you know, it really again, I I hate being giving like the lawyer answers, right? But it really depends. It depends on your jurisdiction, you know, do what are what are the banking laws surrounding access? So if you have a a bank vault in the US, um and you don't have someone else as as an approved person on the bank vault with you, um there there has to be a court process in order for your heirs to get access. And so again, if you're talking about, you know, a time of access, if time matters, if your if your family

needs access to these assets right away, a bank vault might not be the best choice for you because it'll take some time for you for to prove that, you know, this person actually should be able to access this and that, you know, you are deceased, etc., etc. So, there's legal process that that that is involved with that. On the other hand, that also makes those those storage locations more secure, right? So, anyone from the street can't just walk in. Um so, you know, it's really a balance. It's a balance about whether or not you think your assets are going to be seized, you know, do you want to put someone else on your bank vault with you? You know, all of these are are things that you need to think about, but primarily when you're doing the get it done plan, you want it to be fireproof,

waterproof, and, you know, not generally accessible to everyone, but you also want to balance that with making it accessible when they need it. So, um one thing you can do is store it with your will, wherever you're storing your will. Um and that's one of the common misconceptions is people store like the only copy of their will in the safe deposit box, which becomes problematic because then you have to go through a legal process in order to gain access to the safe deposit box, and then often that that takes a lot of time and a lot of hassle.

So, um you know, best practice is that you don't actually store those in a bank um vault, that you would store those, you know, maybe at home in a fireproof safe or at work in a fireproof safe or something like that, uh where, you know, you you have access to those documents or your loved ones would have access to those documents when they need them. I think it's also important to say like don't put your seeds in this letter. Like don't write your you know, your seeds or your private keys in the letter. You want to keep those separate, and you don't want to put that in your will either.

Um you know, in a lot of jurisdictions, wills become public record. What I mean by that is um when your family wants to effectuate the transfer of your assets, like your other assets outside of crypto, they'll file the will with the court. And then that becomes part of the public record, meaning that anyone who knows how to search that can search it. And so if you put your keys in there, chances are the judge and you know your lawyer may not understand what that means when you put the private key in, but someone savvy who wants to take advantage of public records and get some Bitcoin for themselves might be the first to see it, and by the time your family gets there, you know, the assets are swept and there's nothing your

family can do. So don't put your keys in your will. Bad idea. Yeah, no, I can see that. That was yeah, very interesting. I didn't realize that, you know, wills can then become such so publicly accessible often. It it depends on the jurisdiction. So in some jurisdictions, they're absolutely private. But generally in the US and in in Canada, I believe, um they're public. Great. Now now there is one thing I would like to speak about regarding this inheritance thing, right? So so the scenario of I have this letter, and and now I'm basically passing control of these assets to a particular person, you know, maybe a spouse, maybe a sibling, maybe a parent or something like that.

You know, that's you know, reasonably straightforward. But now let's say I have my will, right? And in my will it says, "Okay, 30% go to the this person, 20% to that person, some some amount to that person." And then does it still make sense or or to like pass this all to to to particular person who then fully controls it? Or should you have think of some different mechanism to actually ensure that the assets would be distributed according to your will? So this question is awesome. It brings up so so issues.

So let let's kind of break it down. Um number one, one of the things that a lot of people don't recognize is that um how your assets are passed down is actually controlled by your local law. And what I mean by that is regardless of what you do with your keys, by law, you there are some distributions that might have to happen, especially if you don't have a will. So, if you do nothing and you have no will, the state doesn't just say, "Oh, well, we don't know what to do with the assets, right?" In every jurisdiction, there is a law, and I guarantee you

whatever jurisdiction you're in, there is a law that says what happens to your assets, how are they distributed if you don't say otherwise. And generally in the US, that's called the law of intestacy. Um you die intestate, meaning um without a a testimony of where you want your assets to go. So, if you die intestate, what will happen is with crypto assets or with other assets, it doesn't actually matter. Um whoever the executor of your estate is will take control of those assets if they can, if they have the keys, and then they will distribute them to the rightful heirs according to whatever the law says.

Generally speaking, if you have a spouse, they will get a substantial portion or all of your assets. If you have children, generally they will also take a substantial portion, but not at the exclusion of your spouse. If you don't have a spouse or children, typically it will go to siblings or parents or things like that. Um it's all based upon blood relation. Meaning that if you wanted to give to uh your favorite podcast, for example, if you wanted to donate all of all of your crypto to your favorite podcast, um, you would not be able to do that unless you write it in a will, okay? So, if you want to do that, you just write it in

your will. It's very simple. Um, you may put the address, you may not. I don't really think it's a good practice to put the address in, and the reason is because, um, your favorite podcast might change their donation address. So, you want to make sure that, you know, you just very clearly delineate where you want those funds to go. So, to get back to your question, you have someone, a helper, who is going to help your estate access your crypto assets. They, the helper, should never be taking control of those assets directly. What they should be doing is working with whoever the rightful heirs are, or whoever the executor of your estate. And when I say executor, I just mean the person in charge, right?

Generally, there's one person who's going to help do everything to close out your estate. They're going to transfer your title to your property, to your car, make sure that, you know, your jewelry or your furniture, or whatever happens, um, happens the way that you want it to. And that's the executor. So, your helper will help the executor distribute those assets in whatever way is is legal and rightful. So, the helper will help the executor. And then the it's the executor's job to distribute those assets the way that it says in the will. Now, with crypto assets, we have a little problem.

And that is often the heirs have no idea how to securely hold crypto assets. And so, then we have a situation where we either, if the heirs want to hold the crypto assets, we can do education and kind of help them and teach them and walk them through the process. Um, I'm sorry to say that right now what's happening is, uh, most of those assets are going to exchanges, and the heirs are holding them on exchanges because they don't feel comfortable holding their own keys. Often, um the heirs are liquidating a portion, but not all of the crypto assets. So, remember, you can't force your heirs to hoddle.

I mean, unless you do a lock time, but maybe that's beyond the scope. Maybe that's like advanced planning. Um but, you know, if if someone inherits, you can't force them, just like you can't force them to hold a stock. If they want to liquidate, they're going to liquidate, and there's very little that you can do to to stop that. So, the question becomes, how do we do the distribution? If it's just a traditional distribution, the the executor will say, "Okay, these three people are entitled to a third each. Let's open up um either an exchange account, or let's get them on Trezors or Ledgers or whatever, and we'll have the helper help us move them. We'll be able to prove to the court that that's what's happened, and the heirs will understand, hopefully, um how the process works."

If you're trying to do it outside of the legal arena, um that poses some other problems. So, for example, if you wanted to do this directly without an executor, you could, in theory, say, "Okay, when I die, I want this, you know, smart contract to distribute these assets to these three keys." Sounds simple. Sounds easy. The difficulty is A, when were those keys generated? Are the backups still there? So, what happens when the smart contract actually moves assets to keys where the private key is uh lost or missing or corrupted or etc., etc., right? Um and then, how are we sure that

those heirs are actually going to be able to handle those assets? And then, and here's where it all gets ugly. I'm sorry in advance. But, if If decided to give your assets, your crypto assets, to three people who weren't legally entitled to them, now you've got a lawsuit. Because your heirs, legal heirs, have a claim against the people who took your crypto assets. And if they find out that, you know, they are entitled to crypto assets, but they didn't get them, especially if they're worth a lot of money, um you may end up creating a situation where all the money spent on lawyers, where your heirs get nothing, where your friends

get nothing, and you create a bunch of legal hassle, years worth of problems, when you don't actually have to do that. So, that's why I'm a bit a big advocate of like figuring out the legal side. And again, it doesn't have to be like a big to do, but figuring out the legal side so that you can avoid those sorts of problems. So, that you can avoid dealing with lawyers and having this eat up, you know, the the primary value. Cool. That makes a lot of sense. Now, I do want to speak briefly about this trusted third-party thing. So, recently there was this analysis that uh Chainalysis published about your Bitcoin usage, and they said today around 80% of all transactions uh in Bitcoin are coming

through trusted third parties. So, that could be things like Coinbase, like hosted wallets, or it could be exchanges as well. So, obviously, they were very popular. Most people use um from that usage uh trusted third parties to uh you know, for transactions or holding holding their money. And and that seems to be going more in that direction even on both on institutional side, where people looking for these custodians or third parties to manage their assets. But also on an individual side, right? There are services like Xapo that have a lot of usage even among very large crypto holders.

So, do you think there is there is a place for that in this? And and what do you think is sort of a a good way of using some of those trusted third parties to maybe help in this process or do you think that's something that people should generally try to avoid? I I think that third parties provide a service for some people and I think third parties are the easy traditional way to go and I think that's why we see so many so many people saying, "Okay, I'm going to hold my you know, my cryptocurrency in these third-party exchanges because we've been taught that we can't manage our own money. We've been taught that we have to trust financial institutions or that not

even that we have to trust that they are better equipped to hold your money than you are and that's because we've never had a system like Bitcoin or cryptocurrencies before where we can actually hold our own money in a way that's maybe more secure than having a bunch of cash underneath our mattress, right? And so I don't think that it's really a surprise that people are doing this because, you know, learning key management it is right now kind of tough and it's kind of onerous and you know, it's it's kind of a big stance is is these hosted wallets or these, you know, institutional players to kind of do it like we've always done it. It makes it less scary. Um that is not the future that I want to see though.

I I'm a big believer in in disintermediating third parties. I'm a big believer in having us learn how to do key management because I think it really represents that the the opportunity to have a fundamental shift in the way that we interact with one another. What I mean in English is if we can understand if we can hold our own keys and we can hold our own money, we can also hold our own identity. We can also start to take ownership of all of these other things that we've learned that third parties don't always act in our best interest.

We've learned, you know, that that we should be doing these things. And I think that cryptocurrency is kind of the catalyst for getting people to learn how to securely manage keys and for getting us as an as an industry to provide better interfaces, to provide better education, to empower people to actually do these. So, you know, when we talk about third parties, they definitely provide a value, right? In the same way that they provide a value in traditional banking. But I don't think that that represents the big wave of change that I and and many other people in the industry are hoping to see. You know, for me, the trusted intermediary, the trusted third party, just represents a new person at

the head of the old guard. Right? It's new people that are getting rich on the same old model. There's nothing innovative about that. And that's not why I'm in this this industry. Um I'm in this industry to shake up. I'm in this industry to, you know, to see what it's like when people are actually empowered. And so, that's why I'm not a big fan of of of third parties. Now that said, you know, again, third parties do provide some value in some places. And as we start to get rid of them, we have to take a minute and and recognize the value that they bring and say, "Okay, well, what what what did this third party provide?"

So, in in terms of inheritance planning, like they provided access, right? If you die with a bank account, your family can get the the money in the bank account because there's a third party to compel. With crypto assets, they can't. And so, that party to compel, we have to supplement that with something. And that's why we've been doing inheritance planning, and that's why it's so important to write your letter to your loved ones, and that's why it's so important because you have to fill that gap. You have to provide that service that was otherwise provided by provided by the third party.

Well, that that was very very well explained, and I think that actually does provide a nice explanation why crypto asset inheritance planning is is such an important and also not trivial task, right? Because really you are you're actually filling in for for the the role of the banks and and other asset holders that they have today. Exactly. Well, and I think one of the other things is that and we touched on this earlier, but I just kind of want to circle back around to it. Like estate planning and inheritance planning doesn't have to suck. Like it doesn't have to be terrible. If you change your mindset and you kind of look at it like "Hey, I'm going to be giving this

amazing gift to my friends, to my family, to a charity, to you know, political cause, to anyone that I want." And like just think right now, if someone were to give you the same amount of Bitcoin or ether or any other crypto asset that you had right now, like if your holdings just doubled, wouldn't you be excited? You'd be like, "Yes, this is awesome, right?" And you have that ability to give to your friends and family. Like you're in it early. You're in it so early that there really aren't great processes involved to kind of handle this for you. So, I I think it's I think it would be a shame to not have your family take advantage. Also, it's a great way to say I told you so from the grave.

Yes, that that is that is absolutely true. Well, Pamela, thanks so much for coming on. Maybe before we wrap up uh so we of course we are going to link in the show notes to you know, your book, a third key website, Empowered Law website, as well as the articles you mentioned. But, is there I don't know, some kind of call to action or something else that that you want to give to listeners sort of to take away with? Uh absolutely. So, for anyone who's listening right now, if you have crypto assets, even if it's small, take 15 minutes. 15 minutes is all it takes. Go to Medium, look at the links, do your letter to your loved ones. And

if you don't have 15 minutes, then do the 3-minute asset inventory. Like, I know you have 3 minutes, and it could really, really be the difference for your family. It could really or your loved ones, your friends. It can really make a a world of difference for them. So, I encourage you to just do that. Um and and like do it now. Like literally, like right now. Just like get out some some pen and paper and like make it happen. If you can't do it right now, put a reminder on your calendar to do it. It's not that scary, I promise. And, you know, if you start to get into it and and um and you you feel like you need more, obviously the book is available. I've talked about this issue a lot at different meetups around the world. Um and if you know a lawyer who needs to be

trained, I'm doing another legal workshop uh October 26th in Chicago. And um your lawyer can if if you're like, "You know what? I don't want to do any of this. I want my lawyer to help me do it." They can get trained, and then they can help you do this. So, call to action, just do your letter. 15 minutes. You won't be sorry. Well, thanks so much, Pamela, and thanks so much for your work and and your book. Uh I think it's a very important work you're doing here. Thanks for having me. And of course, thanks so much for our listeners for once again tuning in. So, again, we will going to have show notes uh and links to all of this. So, if you want to read up and uh I totally agree with Pamela that this is a very important issue that should not be

neglected. And of course, you can subscribe to the show on iTunes, or you can also watch the video on youtube.com/epicenterbitcoin. And yeah, if you want to support the show, you can leave us an iTunes review, or uh you can make a donation, or you can now a not a new option, right? As as Pamela mentioned, you can in in uh gift your uh crypto to the podcast. I don't know. You don't need to do that. But okay, so thanks so much and we look forward to being back next week.