The case for password managers
Since the introduction of PCs, people have been concerned about cybersecurity. In the early days of the computer industry, cybersecurity was associated primarily with protecting your PC.
That was normal back then. The cloud and the various cloud services did not exist, so people stored all their important information on the local hard drives of their PCs. It was not surprising that they wanted to protect primarily the device which was storing their information.
The first antivirus and computer protection programs targeted exactly that – protecting the home computers of users and the business computers of corporations.
Years passed, cloud computing emerged, and suddenly, unnoticeably, most services became cloud services, including those for storing personal information.
It was not so important anymore to protect your hard drive (or how big it was). It was rather what your plan was for DropBox, whether you had Google Drive, and how many gigabytes of data you could store there.
Suddenly, computers became just replaceable consoles; all important data was stored in the cloud. Buy a new computer, and with just a few clicks, you could restore all your data and applications.
With this massive transformation, though, people soon realized that they should now protect not their computers so much, but rather their information, dispersed and stored in various online systems and platforms.
People not only had to protect their data, such as email accounts and social platforms, but they also faced the problem of the passwords for all these accounts. Simply using the same password was not safe at all. If your password was leaked, knowing your email password, malicious hackers could access all your online accounts. Not cool at all!
And at the dawn of the cloud revolution, most online services didn’t have 2FA or multi-factor authentication.
Password managers tackled exactly these two problems:
- First, they increased the level of security of your online accounts;
- Second, you could use one master password for your password manager, and then the password manager would remember and populate different passwords for your various online accounts.
That was a pretty good value proposition, and it’s not surprising that password managers soon gained huge popularity. Still, they lacked one significant capability.
They were not well positioned to enable people to protect their digital and financial assets. Let’s see why.
Protecting assets is not equal to protecting passwords
Protecting your digital and financial assets requires one additional type of protection, over and above the cybersecurity risk.
This is protection against the risk that your family and loved ones won’t be able to identify, locate, and inherit your assets should anything happen to you.
Why does this risk exist in the first place? Exactly because of the cloud revolution. It brought many benefits, but it also led to the dispersal of your digital and financial assets all over the place – in online trading accounts, portfolio management platforms, digital vaults, you name it.
People these days also have many diverse assets – bank accounts, insurance policies, company stocks, stock options, cryptocurrencies. This increases the risk that your loved ones won’t be able to identify, locate, and ultimately inherit your assets should anything happen to you.
Password managers provide little to no protection against this risk. Yes, you might have the most secure digital or financial asset, but what’s the point if your family won’t inherit it?
Digital inheritance to protect your digital and financial assets
The problem with abandoned and unclaimed digital and financial assets is becoming a pandemic.
There are multiple reports out there containing shocking numbers: $100B in unclaimed assets in the USA, £77B in unclaimed assets in the UK, $1B in unclaimed assets accumulated in only one year, 2018, in only one state – New York!
Digital inheritance services and digital legacy management systems emerged exactly to fulfil that need – to enable people to protect their dispersed digital and financial assets and to ensure that their families would be able to identify, locate, and inherit them should anything happen to the asset owners.
The magic trick of digital legacy management systems is their ability to detect fatal events happening to the owners. They achieve this through various technological advances: monitoring activity on social networks, integration with wearables such as smart watches, detecting live events through the usage of smartphones, etc.
All these safety nets ensure that a fatal event will be detected, which will trigger the communication to the family members associated with each of the assets protected by the digital inheritance service.
This notification is also bulletproof. Email alone is, of course, not sufficient. People might disregard it, not see it, or miss it when it goes into the spam folder. That’s why these systems rely on additional communication channels, including phone calls to the listed beneficiaries, to ensure they’ll be informed about the designated assets and will receive all the necessary information to enable them to identify and locate the assets and start the process of claiming their inheritance.
Password management 2.0 – with digital inheritance
Still, password managers and digital legacy management systems were fulfilling two slightly different needs:
- protecting the access to the assets, and
- protecting the inheritance of the assets.
Not long after, we started seeing these two worlds converging. Password managers started to offer more and more digital inheritance features, while digital legacy management systems started to offer more and more password management capabilities.
Will they eventually converge? Our prediction is – not really.
The reason is that they still fulfil quite different purposes.
Password managers enable you to protect all your digital accounts. Let’s face it – 90% of them are “daily” accounts, which are not important to your loved ones.
Digital inheritance services, on the other hand, enable you to protect exactly that 10% of your digital accounts which you want to make absolutely sure that your family will be able to identify if something happens to you.
That was a pretty good value proposition, and it’s not surprising that password managers soon gained huge popularity. Still, they lacked one significant capability.
They were not well positioned to enable people to protect their digital and financial assets. Let’s see why.
