Examining Bitcoin Custody Under Stress: A Framework for Observation and Recording

Abstract

Bitcoin custody systems are constructed under conditions of full knowledge and activated under conditions of partial knowledge. The person who designs a custody arrangement understands its components, dependencies, and intended operation. The person who later encounters that system—often an executor, trustee, or heir—must interpret and operate it without access to the designer's contextual understanding. This paper defines a descriptive framework for examining Bitcoin custody systems under stress conditions at a point in time, producing reference records for later interpretation. The framework treats examination as observation rather than evaluation: it records what exists, what dependencies connect components, and how the system behaves under modeled stress scenarios. It explicitly excludes advice, recommendations, certification, and adequacy assessment. The framework introduces four modeled outcome states—survives, constrained, blocked, and indeterminate—that describe observed system behavior without normative judgment. It defines stress conditions including owner absence, cognitive unreliability, device loss, institutional delay, and coordination failure. It specifies what reference artifacts examination produces: system snapshots, scenario-bound observations, dependency maps, and assumption registries. The paper addresses how professionals—attorneys, fiduciaries, advisors—can engage with examination records without overstepping interpretive boundaries. It distinguishes what records can establish (what was described, what was modeled, what assumptions applied) from what records cannot establish (adequacy, correctness, future outcomes). The framework is offered as a reference for professional contexts where Bitcoin custody must be understood by parties other than its original designer.