Bitcoin Custody Coordination Gaps

Coordination Gaps Between Technical and Human Layers

This memo is published by CustodyStress, an independent Bitcoin custody stress test that produces reference documents for individuals, families, and professionals.

Knowledge Distribution Failures

Technical setup can be complete while human coordination remains incomplete. Bitcoin custody coordination gaps appear when all the cryptographic components exist but the people who need to work together cannot—because they do not know each other, cannot reach each other, or do not know what they need to do together. The keys work; the humans do not.

Coordination involves knowledge distribution: who knows what exists, who knows where to find it, who knows how to use it, and who knows whom to contact. Gaps in any of these dimensions can prevent recovery even when technical elements are properly configured. Human infrastructure fails while technical infrastructure remains intact.

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Knowledge Distribution Failures

Information about custody resides in people's minds, not just in documentation. When that information is concentrated in one person, their incapacity or death eliminates it. Distributed knowledge requires deliberate effort that many holders never undertake.

The holder often knows everything while others know nothing. This concentration works during the holder's lifetime but creates catastrophic failure at death. Suddenly, all the knowledge needed to coordinate recovery is gone, and the people who remain cannot reconstruct it.

Partial knowledge distribution creates its own problems. One person knows the backup location but not the passphrase. Another knows the passphrase but not the location. A third knows both exist but not where either is. These fragments do not automatically combine into complete knowledge.

Documentation substitutes imperfectly for distributed knowledge. Written records can transfer information but cannot transfer judgment, context, or the ability to improvise when things differ from documentation. Coordination that depends on documentation faces the limitations documentation carries.

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Contact Information Gaps

People who need to coordinate must be able to reach each other. Custody arrangements often involve multiple parties who may not have each other's contact information—or whose contact information has become outdated.

Family members may know each other but not know each other's roles in custody. A spouse may not know that a sibling holds a key. Children may not know that a family friend was designated to assist. The people exist; their custody roles are unknown to those who need to coordinate with them.

Professional contacts decay over time. An attorney's phone number from ten years ago may no longer work. A financial advisor may have retired or died. A custody service may have changed ownership. Contact information recorded at setup time drifts from current reality.

International coordination adds complexity. Phone formats, time zones, and communication norms differ across countries. A key holder in another country may be unreachable through methods that work domestically. Geographic distribution that seemed to add security may create coordination barriers.

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Role Ambiguity

Coordination requires clarity about who does what. When roles are unclear, people wait for others to act, assume someone else is handling things, or take conflicting actions. Role ambiguity produces paralysis or chaos.

Multiple parties may each believe another is responsible. The executor assumes the attorney is handling bitcoin. The attorney assumes the family is handling it. The family assumes the executor is. No one acts because everyone believes someone else is acting.

Overlapping authority creates conflict potential. Two people may both believe they have decision-making power. Their disagreement about who controls what can deadlock coordination even when both want the same ultimate outcome.

Undefined sequences leave people unsure who moves first. Does the executor retrieve the backup before contacting key holders? Do key holders wait for the executor or proceed independently? Without sequencing, coordination can stall at its first step.

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Trust and Verification Challenges

Coordination requires trust between parties who may not know each other. When the holder dies, strangers may need to work together on high-stakes tasks. Establishing trust without the holder's introduction proves difficult.

Key holders may not trust people claiming to represent the estate. A family member calling to request cooperation could be legitimate or fraudulent. Without verification methods, key holders face uncertainty about whether to cooperate. Refusing to cooperate prevents fraud but also prevents legitimate recovery.

Professionals face similar verification challenges. An attorney claiming to represent the estate may be genuine or impersonating. A custody service being asked to release information needs to verify the request is legitimate. Verification procedures add friction that delays coordination.

Family conflicts amplify trust problems. Siblings who do not trust each other cannot coordinate smoothly. A spouse distrusted by the holder's children faces resistance. Pre-existing relationship tensions become coordination obstacles when cooperation is required.

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Timing Coordination

Coordination often requires simultaneity or sequencing that is difficult to achieve. People must act at the right time relative to each other, and coordinating timing across distances and schedules proves challenging.

Multisig transactions may require coordinated signing. One party signs, then passes the transaction to another party, who signs and passes to a third. This relay requires availability, communication, and attention from multiple parties in sequence. Any delay in the chain delays the whole process.

Availability varies and cannot be commanded. A key holder may be traveling, hospitalized, or simply unresponsive. Their unavailability blocks coordination regardless of others' readiness. Dependency on multiple parties' simultaneous availability creates scheduling fragility.

Urgency does not create availability. Estate deadlines, market conditions, or practical needs may make coordination urgent. But urgency felt by some parties does not translate to availability from others. The person who needs things to happen quickly cannot make others be available.

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Information Security During Coordination

Coordination requires sharing information, but sharing creates security exposure. Each communication channel, each piece of information transferred, and each person involved represents potential vulnerability. Coordination and security tension with each other.

Sensitive information must travel between parties. Seed phrases, passphrases, and procedural details may need to be communicated. The methods used—email, phone, messenger, mail—each carry different security properties. Choosing appropriate channels requires security awareness that coordinating parties may lack.

Multiple parties increase exposure surface. Each person who learns custody details becomes a potential point of compromise. Information that was secure when known only to the holder becomes less secure as it distributes through coordination. More coordination means more exposure.

Verification procedures themselves can create vulnerabilities. Asking someone to prove their identity may require sharing information that could be exploited. The process of establishing trust may itself introduce risks that would not exist without coordination.

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Coordination

Coordination may involve institutions—banks, custody services, legal systems—that operate on their own procedures and timelines. These formal requirements may not align with what human coordination needs.

Banks holding safe deposit boxes have access procedures that may not accommodate estate situations smoothly. The person authorized to access during the holder's life may not be authorized after death. Formal requirements add steps to coordination that human parties alone would not need.

Legal processes impose their own coordination demands. Probate proceedings, executor appointments, and court approvals all involve institutional timelines. Human parties ready to coordinate may wait for third-party processes to complete before they can proceed.

Professional service providers have their own internal procedures. A custody company being asked to assist with inheritance may require documentation, verification, and approval processes that take weeks. These institutional rhythms may not match the urgency human parties feel.

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Cascading Coordination Failures

Coordination gaps compound each other. One gap creates a delay. That delay affects other parties. Their response to the delay creates further complications. A small initial gap cascades into larger systemic failure.

Unreachable parties create downstream effects. When one key holder cannot be reached, others cannot proceed. Their waiting frustrates them. They may make unilateral decisions that create additional problems. One gap spreads into multiple gaps.

Misunderstandings propagate through coordination chains. An error in communication between two parties gets passed to a third. By the time it is discovered, multiple parties have acted on wrong information. Correcting the error requires re-coordinating with everyone affected.

Conflicts that emerge during coordination can freeze the entire process. When two parties disagree, others may not know how to proceed. Waiting for conflict resolution delays everyone. Meanwhile, deadlines approach, pressure increases, and the coordination challenge grows harder.

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Pre-Death Coordination Setup

Coordination gaps can be reduced—but not eliminated—through setup during the holder's lifetime. Introducing people who will need to coordinate, establishing communication channels, and clarifying roles all help. This preparation requires effort the holder may not undertake.

Introduction while alive creates baseline familiarity. People who have met each other, even briefly, coordinate more easily than strangers. A key holder who has talked with family members will more readily cooperate with those family members after the holder's death.

Documentation of coordination procedures provides reference for confused parties. Who contacts whom first? What information needs to flow where? Written procedures give parties something to follow when they do not know what to do next.

Testing coordination while the holder can still answer questions reveals gaps. Walking through the process with actual parties—not just documenting it—surfaces problems that documentation alone would miss. But testing requires all parties' participation, which may be difficult to arrange.

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Conclusion

Bitcoin custody coordination gaps occur when technical elements are properly configured but human coordination is not. Knowledge distribution failures, outdated contact information, role ambiguity, trust deficits, timing challenges, information security tensions, and formal requirements all create gaps that prevent successful coordination.

These human coordination gaps exist independently of technical completeness. All the keys may be properly backed up, all the documentation may exist, but if the people who need to work together cannot do so, recovery fails anyway.

Coordination gaps cascade and compound. One gap creates delays that create further gaps. Small initial problems grow into systemic failures. Preparation during the holder's lifetime can reduce but not eliminate coordination challenges, and many holders never undertake such preparation.

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System Context

Examining Bitcoin Custody Under Stress

Family Can't Find Bitcoin: Modeled Discovery Failure and Inheritance Loss

Bitcoin Inheritance Behavior When a Spouse Does Not Understand Bitcoin

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