📊 Now LIVE: RWA Report 2024
Coins: 13,536
Exchanges: 1,031
Market Cap: $2.792T 2.5%
24h Vol: $120.385B
Gas: 43 GWEI
Go Ad-free
Guides
TABLE OF CONTENTS

What is a Dead Wallet in Crypto?

4.5 | by Joel Agbo

What is a Dead wallet?

A dead cryptocurrency wallet is one that has stayed dormant for a long period of time. Dead wallets hold crypto assets but haven’t sent or received any transactions for years. Dead wallets can occur due to the loss of wallet keys, holders holding long-term investments, or even the demise of the wallet owner. 


Key Takeaways

  • Dead wallets are wallets that have stayed inactive for many years during which they haven’t sent or received any transactions but are holding crypto assets.

  • Dead wallets might be due to an investor holding their assets for the long term, an investor dying without handing down their wallets, or an investor losing their wallet passwords and passphrases. 

  • Dead wallets will come to life if their passphrases are found anytime or the investor decides to move their assets after a long hold.

  • Dead wallets are different from burn wallets, which are inaccessible wallets or null addresses. Crypto assets sent to burn wallets are considered as being removed from circulation.


What is a a dead crypto wallet?

A publication by Decrypt in January 2020 claims that about 3.7 million bitcoins will never move again as they are locked away (accidentally and intentionally) for good. This is because these crypto assets are stored in truly dead wallets or have been ‘burned’. In the case of ‘burned’ tokens, these are deposited in burn addresses to control asset circulation.

While coins in dead wallets are still counted towards the circulating supply, these inactive cryptocurrencies are likely to be never moved again, rendering them essentially nonexistent with no impact on the market sell pressure or supply/demand friction.

How Are Dead Wallets Defined?

Put simply, a dead wallet is an inactive wallet. A wallet is considered inactive when it has stayed dormant for a (very) long time, say multiple years. The wallet must however be in custody of a crypto asset, else, it is more of an empty wallet than a dead wallet. Dead wallets are rampant, but the reason behind their inactivity varies.

In a normal scenario, a crypto wallet should receive and send transactions regularly, and when this is not the case, there are a few possible explanations.

An investor is simply locking up some investments with the hopes of coming back to them in the future when they are probably worth more. This could be within any period of time. During this time, the wallet stays inactive and is considered ‘dead’ due to a zero record of on-chain activity. However, once the investor adds more assets to their holdings, the wallet becomes active.

Another reason behind dead wallets is the loss of the wallet’s private keys. This could be due to poor storage or the accidental demise of wallet owners without the transfer of wallet keys. As blockchain technology makes private keys the only point of access to a crypto wallet, the loss of private keys renders the wallet inaccessible and inactive. 

Can a Crypto Wallet Expire?

Crypto wallets cannot expire. Even if a wallet is inactive for years or decades, the integrity of a crypto wallet remains intact. Once a wallet is created, its details are stored for eternity on the blockchain, and the wallet can be at any time used by anyone who has the required keys. 

This is different from bank accounts, as in most systems, a bank account that stays dormant for a long time will undergo an activation process before it can be used again, but this is not the case for cryptocurrency wallets. 

What Happens to Crypto Assets in a Dead Wallet?

Cryptocurrencies or NFTs in a dead wallet remain intact until the wallet can be accessed. The wallet’s details can be obtained and verified on-chain via blockchain explorers like Etherscan, but the assets within can only be moved by anyone who has the private keys. If the wallet doesn’t get compromised through any means, an investor that has locked away crypto assets will be able to come back to an intact asset whenever they wish.

Is It Possible to Use Assets in a Dead Wallet?

If a wallet becomes inaccessible because the owner and sole holder of the private key has lost them or has passed away, the wallet is truly dead and the contents cannot be moved. For fungible tokens like bitcoin, there is almost nothing that can be done with the wallet and its contents. But there’s a catch for NFTs.

NFTs are blockchain art and can be displayed as such using the NFT’s address. In a publication made on his Twitter account, NFT enthusiast Cozomo de’ Medici announced the donation of 22 works from The Cozomo de' Medici Collection to the permanent collection of the Los Angeles County Museum of Art (LACMA).

In what is a breakthrough for NFT technology, art museums are displaying popular NFTs in their facilities. The museum does not need to be in the custody of the art itself or the NFT wallet’s keys, but must ensure the proper acquisition from the artist or the collector. NFTs in dead wallets can therefore be donated to museums through a simple verbal proclamation. 

"Collectors will be delighted to donate dead NFT wallets to museums. Museums won’t have to do anything in order to accession or preserve the NFTs. The blockchain is forever and transfer consists of nothing more than the collector saying, “I give you this wallet.” Deaccessioning is impossible. And even better, so is theft! Dead wallets will be the only asset museums don’t even have to insure."

- Brian Frye, "Why Not Donate Dead NFT Wallets?", CoinDesk Consensus Magazine 

Got a dead NFT wallet? You could put it to use by walking into a nearby NFT-friendly museum and telling them to “have it”.

Until a similar program is adopted for fungible tokens, fungible assets in dead wallets are of no use, unfortunately.

How to Simplify Wallet Recovery in Case of Accidental Demise

Cryptocurrency investments could grow into a fortune over time, regardless of how tiny they are initially. As long as an investor stays alive, it is recommended that they ensure sole knowledge of their private keys, but this also means that if the wallet owner dies suddenly, they will be unable to hand over the private keys before their demise. Here are a few means to make the wallet discoverable in such unfortunate cases:

Multi-Sig Crypto Vaults

Crypto vaults are handy for the management of crypto assets owned by multiple individuals. They provide an extra verification and approval system for crypto assets and therefore an extra layer of security. Multiple-signatory vaults require approval from all or majority of the signatories before approving a transfer. The key advantage here is that vaults do not use the private key system, and the risk of totally losing access to crypto assets is avoided when using vaults.

Using vaults also means possible delays of withdrawal requests and extra fees. When using vaults for the purpose of preserving assets, you can store huge-value assets in the vault and use personal wallets for managing routinely used assets.

Legally Bound Clues

One way to make it easier to recover crypto investments after the holder’s demise is by including hints about your crypto investment in your will and also clues of where to find the keys or the wallets. It is recommended to make this cryptic and with hints which are personal to intended kin.

Written Passphrases

Writing down your passphrases on crypto steel and hiding them in secret places, such as a safety deposit box, gives your surviving kin a chance to find them sometime in the future. 

Dead Wallets vs. Burn Wallets

Coin burning describes the act of permanently removing a crypto asset from circulation. This is done by sending the asset to a ‘burn wallet’ or null address

Dead wallets and burn wallets share a number of similarities, where both contain crypto assets that cannot be sent. Truly dead wallets and burn wallets contain assets that are technically removed from active circulation forever.

However, dead wallets are actually personal wallets that are left inactive either on purpose or by accident, while burn wallets are null addresses created for removing crypto assets from circulation. By design, burn addresses don’t have private keys and their contents cannot be retrieved through any means, where assets sent to such addresses are really lost forever. Dead wallets on the other hand have private keys and are inaccessible because the keys were lost. Should the private key be found anytime in the future, dead wallets can come to life again, but this is not possible with a burn address.

Finally, dead wallets have owners, specifically the creator and the sole holder of the wallet’s private keys. Meanwhile, burn addresses don’t have an owner; they simply exist for burning crypto assets and removing them from circulation.

Final Thoughts

The rigid security system in blockchain networks is a double-edged sword. On the bright side, it keeps your assets safe when you manage your wallet details properly. On the other hand, you are the only one responsible for your assets and the storage of your private keys. This is unlike centralized systems, where there is an account recovery option through customer support in the event passwords are lost or compromised.

This security structure means that you are your own bank, and assets in your custody remain yours whether you can remember your keys or not. In the latter case, you’re unable to use your wallet, but the contents remain yours until someone else obtains your keys. While this is not the only reason behind dead wallets, it is the only true death scenario for cryptocurrency wallets.

Unfortunately, the known ways to prevent the total loss of a cryptocurrency wallet reduce the rigidity of the security offered by blockchain technology.

As the crypto space develops, better ways to preserve wallet details might emerge, as in Starknet’s Deadman Switch. As always, do your own research before choosing any crypto storage solution, and the contents of this article are only educational and not financial advice.

Tell us how much you like this article!
Vote count: 13
Joel Agbo
Joel Agbo

Joel is deeply interested in the technologies behind cryptocurrencies and blockchain networks. In his over 7 years of involvement in the space, he helps startups build a stronger internet presence through written content. He is the founder of CryptocurrencyScripts. Follow the author on Twitter @agboifesinachi

More Articles

coingecko
Continue in app
Track prices in real-time
Open App
Select Currency
Suggested Currencies
USD
US Dollar
IDR
Indonesian Rupiah
TWD
New Taiwan Dollar
EUR
Euro
KRW
South Korean Won
JPY
Japanese Yen
RUB
Russian Ruble
CNY
Chinese Yuan
Fiat Currencies
AED
United Arab Emirates Dirham
ARS
Argentine Peso
AUD
Australian Dollar
BDT
Bangladeshi Taka
BHD
Bahraini Dinar
BMD
Bermudian Dollar
BRL
Brazil Real
CAD
Canadian Dollar
CHF
Swiss Franc
CLP
Chilean Peso
CZK
Czech Koruna
DKK
Danish Krone
GBP
British Pound Sterling
GEL
Georgian Lari
HKD
Hong Kong Dollar
HUF
Hungarian Forint
ILS
Israeli New Shekel
INR
Indian Rupee
KWD
Kuwaiti Dinar
LKR
Sri Lankan Rupee
MMK
Burmese Kyat
MXN
Mexican Peso
MYR
Malaysian Ringgit
NGN
Nigerian Naira
NOK
Norwegian Krone
NZD
New Zealand Dollar
PHP
Philippine Peso
PKR
Pakistani Rupee
PLN
Polish Zloty
SAR
Saudi Riyal
SEK
Swedish Krona
SGD
Singapore Dollar
THB
Thai Baht
TRY
Turkish Lira
UAH
Ukrainian hryvnia
VEF
Venezuelan bolívar fuerte
VND
Vietnamese đồng
ZAR
South African Rand
XDR
IMF Special Drawing Rights
Cryptocurrencies
BTC
Bitcoin
ETH
Ether
LTC
Litecoin
BCH
Bitcoin Cash
BNB
Binance Coin
EOS
EOS
XRP
XRP
XLM
Lumens
LINK
Chainlink
DOT
Polkadot
YFI
Yearn.finance
Bitcoin Units
BITS
Bits
SATS
Satoshi
Commodities
XAG
Silver - Troy Ounce
XAU
Gold - Troy Ounce
Select Language
Popular Languages
EN
English
RU
Русский
DE
Deutsch
PL
język polski
ES
Español
VI
Tiếng việt
FR
Français
PT
Português
All Languages
AR
العربية
BG
български
CS
čeština
DA
dansk
EL
Ελληνικά
FI
suomen kieli
HE
עִבְרִית
HI
हिंदी
HR
hrvatski
HU
Magyar nyelv
ID
Bahasa Indonesia
IT
Italiano
JA
日本語
KO
한국어
LT
lietuvių kalba
NL
Nederlands
NO
norsk
RO
Limba română
SK
slovenský jazyk
SL
slovenski jezik
SV
Svenska
TH
ภาษาไทย
TR
Türkçe
UK
украї́нська мо́ва
ZH
简体中文
ZH-TW
繁體中文
Login to track your favorite coin easily 🚀
By continuing, you agree to CoinGecko Terms of Service and acknowledge you’ve read our Privacy Policy
or
Forgot your password?
Didn't receive confirmation instructions?
Resend confirmation instructions
IT'S FREE! Track your favorite coin easily with CoinGecko 🚀
By continuing, you agree to CoinGecko Terms of Service and acknowledge you’ve read our Privacy Policy
or
Password must contain at least 8 characters including 1 uppercase letter, 1 lowercase letter, 1 number, and 1 special character
Didn't receive confirmation instructions?
Resend confirmation instructions
Forgot your password?
You will receive an email with instructions on how to reset your password in a few minutes.
Resend confirmation instructions
You will receive an email with instructions for how to confirm your email address in a few minutes.
Get the CoinGecko app.
Scan this QR code to download the app now App QR Code Or check it out in the app stores