Bitcoin Custody Degrades Over Time

How Custody Arrangements Degrade Without Maintenance

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

The Illusion of Static Systems

A custody arrangement feels permanent at the moment of creation. Everything is in place: hardware configured, backups made, instructions written, perhaps people informed. The setup represents the holder's best thinking at that moment, implemented with the tools available at that moment, suited to the circumstances of that moment. What is not visible at creation is how this arrangement will change as time passes. Bitcoin custody degrades over time through natural processes that require no active failure, no attack, no mistake—just the passage of time acting on every component of the system.

What follows covers the entropy that affects custody arrangements and why degradation is expected rather than exceptional. Every element of a custody system faces its own decay process: memories fade, physical materials deteriorate, technology becomes obsolete, software environments evolve, relationships change, and life circumstances shift. A setup that was robust when created becomes progressively more fragile as these processes accumulate. The holder who has not interacted with their custody arrangement in years may discover that what once worked no longer does.

---

The Illusion of Static Systems

Custody arrangements appear static because nothing seems to be happening. The hardware wallet sits in its drawer. The seed phrase rests in its storage location. The bitcoin balance on the blockchain remains unchanged. From the holder's perspective, the system is dormant, waiting patiently until needed. This appearance of stasis creates the impression that the system's quality remains constant—that what worked last year will work equally well next year and the year after that.

This impression is mistaken. Dormancy is not preservation. A system that is not being used is not being tested, which means degradation goes undetected. The holder who checks their bitcoin balance sees the number they expect and concludes everything is fine, without recognizing that the balance display tells them nothing about whether they could actually move that bitcoin if they needed to. The system looks the same while its underlying components quietly deteriorate.

Physical objects left alone do not remain in their original condition—they degrade according to their material properties and storage conditions. Memories left unexercised do not remain sharp—they fade and distort according to the brain's natural processes. Technologies left unused do not remain current—they fall behind as the environment around them advances. Everything in a custody arrangement is subject to these processes, and none of them pause simply because the holder is not watching.

---

Memory Degradation

Information stored in human memory is particularly vulnerable to time-based decay. PINs that were instantly recallable become uncertain after years of disuse. Passphrases that seemed unforgettable prove forgettable when enough time passes without rehearsal. The holder who created these memory-dependent elements chose them to be memorable to their mind at that moment, but the mind changes. What stuck then may not stick now. Confidence about remembered information often persists even when the information itself has shifted or vanished.

The decay is especially severe for information used rarely or only once. A passphrase entered at setup and never entered again has no opportunity to be reinforced through use. Each passing month without use allows the memory trace to weaken. By the time the passphrase is needed—perhaps years later, perhaps during an emergency, perhaps by someone other than the original holder—the memory may have degraded below the threshold of accurate recall. The holder may not know this has happened until they attempt to use the passphrase and fail.

Context-dependent memory adds another dimension to this decay. Perhaps the holder remembers their passphrase perfectly when sitting at the desk where they created it, using the same device they used then. Remove those contextual cues—different location, different device, different mental state—and recall becomes less reliable. Emergency situations and inheritance scenarios strip away the original context almost by definition, exposing memories to conditions where they perform worst.

---

Physical Material Decay

Written records degrade according to their materials and storage conditions. Paper yellows, becomes brittle, absorbs moisture, and hosts mold in unfavorable environments. Ink fades, particularly under light exposure, and some inks disappear faster than others. Handwriting that was legible when fresh becomes ambiguous as strokes thin. A seed phrase written on paper five years ago may be fully readable, partially readable, or entirely illegible today depending on factors the holder may never have considered when choosing how to store it.

Metal backups resist some degradation modes but face others. Certain metals corrode in humid or chemically active environments. Stamped characters may become difficult to read if corrosion fills in the impressions or if the original stamping was shallow. Physical damage from accidents, fires, floods, or simple mishandling can render metal backups partially or fully unreadable. The durability that makes metal attractive for long-term storage does not make it immune to long-term degradation.

Electronic devices follow their own decay curves. Batteries drain over years, potentially causing data loss or preventing device power-on. Flash memory can lose charge over extended periods, corrupting stored information. Connectors oxidize. Internal components fail from thermal cycling or simply from age. A hardware wallet that functioned perfectly when stored may fail to power on when retrieved years later, or may power on but produce errors when attempting to sign transactions. These failures can occur without any external cause—time alone is sufficient.

---

Technology Environment Drift

Software ecosystems evolve continuously, and custody arrangements embedded in a particular moment of that evolution gradually become misaligned with current environments. Wallet applications update their interfaces, change default settings, and modify procedures. A set of instructions written for software version 1.0 may be confusing or unusable with version 3.0. The buttons referenced may not exist. The menus may be reorganized. The terminology may have shifted. The holder following old instructions encounters a different landscape than the one the instructions described.

Hardware wallet manufacturers create new products and eventually discontinue support for old ones. Firmware updates become unavailable. Companion applications stop supporting older device models. The manufacturer's attention shifts to current products, leaving users of legacy devices with diminishing resources. A hardware wallet that was well-supported at purchase may be effectively orphaned a decade later, with no one producing the software needed to interact with it and no support channel available when problems arise.

External dependencies create additional drift exposure. Recovery processes may depend on specific applications, online services, or operating system features. Applications get discontinued. Services shut down or change their terms. Operating systems drop support for older software. Each dependency represents a connection to a moving ecosystem, and enough movement eventually severs connections that were solid when established. The holder who documented a recovery process finds that the process no longer works because its dependencies have moved or vanished.

---

Life Circumstance Changes

Custody arrangements are designed for particular life circumstances that may not persist. Geographic moves put physical distance between holders and their stored materials. Career changes alter financial situations and risk tolerances. Family changes—marriages, divorces, births, deaths, estrangements—shift who should have access and who should not. The arrangement designed for one chapter of life becomes misaligned as new chapters begin.

Storage locations that made sense originally may become problematic over time. A safe deposit box at a convenient bank becomes inconvenient after a move to a different city. A home safe becomes a point of vulnerability after a divorce when an ex-spouse knows its location and combination. A trusted family member's house becomes unavailable when that family member dies or sells the property. The physical infrastructure of the custody arrangement connects to life circumstances that do not hold still.

Relationships that formed part of the custody design evolve as well. A friend trusted to hold a multisig key may become estranged. A family member designated as backup contact may move and become difficult to reach. A professional advisor may retire or change firms. The human network woven into the custody arrangement at creation unravels as relationships follow their natural courses of change, strengthening, weakening, and ending.

---

Knowledge Becoming Stale

Understanding of the custody arrangement itself degrades as time distances the holder from the decisions they made at setup. Why was that particular passphrase chosen? What was the reasoning behind storing the backup in that location? Which device holds which keys? The holder made these decisions with full context at the time, but context fades. Years later, they may look at their own arrangement with partial understanding, no longer certain why things were done the way they were done.

This knowledge decay affects the holder's ability to adapt the arrangement to changing circumstances. Without clear memory of the original design logic, modifications become risky. The holder may not know what depends on what, what would break if changed, what redundancies exist. They become a user of their own system rather than its designer, interacting with a black box whose internal workings have become opaque to them.

Documentation can preserve some knowledge but not all of it. Written instructions capture explicit procedures but not the reasoning behind them. They record what to do but not why, leaving the holder unable to adapt when circumstances differ from what the instructions anticipated. The tacit knowledge that informed good decisions at setup—understanding of the threat model, awareness of specific risks, intuitions about what mattered—does not transfer to paper and does not persist in memory across years of disuse.

---

The Compounding Nature of Degradation

These degradation processes operate independently but their effects compound. A slightly faded seed phrase is still readable, but reading it requires memory of what the unclear characters probably are—and that memory has also faded. A hardware wallet with outdated firmware could still work if the old software were available, but the old software is no longer compatible with current operating systems. A relationship that might have been repaired with timely attention has passed the point of repair. Each form of degradation makes the others harder to compensate for.

Redundancy provides protection only if the redundant elements do not degrade together. Multiple copies of a seed phrase protect against loss of any single copy, but if all copies are stored on paper in similar conditions, they may all become illegible at similar rates. Multiple keyholders protect against any single keyholder becoming unavailable, but if all keyholders are of similar age, they may become unavailable within a similar timeframe. Redundancy must account for correlation in degradation to provide durable protection.

The aggregate effect of compounding degradation is that custody quality follows a declining curve even when nothing dramatic happens. No single moment marks the transition from working to non-working. Instead, the probability of successful recovery when needed decreases gradually as more and more components drift toward their failure points. The holder experiences this as a sudden discovery when recovery is attempted, but the underlying process has been continuous.

---

Assessment

The recognition that bitcoin custody degrades over time runs counter to the intuition that dormant systems remain stable. Every component of a custody arrangement faces its own decay process: memories fade and distort, physical materials deteriorate, technology environments drift away from the arrangement's original context, and life circumstances change in ways that affect where materials are stored, who has access, and how recovery might proceed.

This degradation requires no active failure—it is the natural result of time acting on systems that were frozen at a particular moment while everything around them continues to evolve. A holder who created a solid arrangement five years ago and has not touched it since may have an arrangement that appears unchanged but is substantially weaker than it was at creation.

The compounding nature of these degradations means that multiple partial failures accumulate into significant risk even when no single component has crossed its failure threshold. Redundancy helps only if redundant elements degrade independently. Knowledge of the arrangement's design helps only if that knowledge is preserved and accessible. A custody arrangement is not a fixed structure but a living system requiring attention to maintain the quality it had at creation.

---

System Context

Bitcoin Custody Failure Modes

Holes in My Bitcoin Security

Bitcoin Custody Behavior Without Technical Knowledge

← Return to CustodyStress