What will happen when holders of Bitcoin die? Would it be possible to pass down their digital wealth through a will? How could that be securely done?
Here's one way ... paper wallets with password encryption:
So the encrypted paper wallet(s) go to family members. DeadMansSwitch gets the decryption key, as does the trustee. From another thread:
I changed the colour to blue for encrypted paper wallets to provide distinction between encrypted/unencrypted paper wallets - a version in the original yellow is included in case you really like yellow, just delete 'note_encrypted.png' and rename 'note_yellow.png' in its place.
This solution (encrypted paper wallets) robably isn't ready for prime time, but give it a few weeks and that will probably become a very good method for offline / long term savings that is secure.
Would we see a massive amount of coins lost forever over time?
Back in the day, a loss of bitcoins in the thousands (of BTCs) would happen now and then, apparently. That's also back when an offer of 10,000 bitcoins to get a pizza delivered took a few days of waiting and some prodding for anyone to finally make that trade.
There still are losses of bitcoins that happen now and then (e.g., forgot the password to the encrypted wallet, didn't have any back ups and hard drive crash, etc.).
But as a bitcoin increases in value, the amount of losses occurring are much smaller. Losing 2 BTC today is a loss of more purchasing power than what Laszlo's 10,000 BTC had back less than three years ago.