Bitcoin Custody Entropy as System Degradation Over Time
Entropy and System Degradation Over Time
This memo is published by CustodyStress, an independent Bitcoin custody stress test that produces reference documents for individuals, families, and professionals.
Components and Their Decay Vectors
Physical systems tend toward disorder. Without energy input, organized structures break down. This principle—entropy—applies beyond thermodynamics to information systems, social arrangements, and complex custody structures. Bitcoin custody entropy describes the tendency of custody arrangements to degrade toward inaccessibility without continuous maintenance. Everything that can go wrong eventually does, given sufficient time.
This analysis addresses custody through the lens of entropy as a systems concept. Custody is not a static state but an ongoing battle against degradation. Every component faces its own decay trajectory. The custody arrangement as a whole faces the combined effect of all its components deteriorating on different timelines.
Components and Their Decay Vectors
Physical materials follow thermodynamic principles. Paper degrades through oxidation, moisture exposure, and mechanical stress. Electronic components fail through electrolytic capacitor aging, solder joint fatigue, and semiconductor drift. Metal plates corrode. Batteries discharge and lose capacity. The physical substrate of custody obeys the same decay laws as all matter.
Information faces its own entropy. Data stored magnetically degrades as magnetic domains slowly lose coherence. Optical media deteriorates through dye layer breakdown. Flash memory cells lose charge over time. Even etched metal can become unreadable through surface corrosion or wear. The information itself—the seed phrase, the passphrase, the PIN—exists in media that changes whether anyone interacts with it or not.
Human memory constitutes another entropic system. Neural pathways that encode information weaken without reinforcement. Interference from similar information corrupts recall. Aging affects storage and retrieval capabilities. The knowledge a person holds about custody degrades on its own biological schedule.
Relationships decay through their own dynamics. Trust erodes. Contact fades. People move, change, die. The social structure supporting a custody arrangement—who knows what, who helps whom—transforms constantly. Yesterday's cooperative helper becomes tomorrow's unreachable stranger.
The Second Law Applied to Custody
Entropy in closed systems increases over time. Custody that receives no attention is a closed system with respect to maintenance energy. No one is replacing aged components. No one is reinforcing fading memories. No one is maintaining relationships. The system moves inexorably toward less ordered states.
Disorder manifests as reduced accessibility. A perfectly ordered custody state means full access capability—all components work, all knowledge is accurate, all relationships function. Disorder means some components have failed, some knowledge has corrupted, some relationships have broken. Maximum disorder means total inaccessibility regardless of how much bitcoin exists.
Local decreases in entropy require energy input from outside the local system. Maintenance—checking devices, refreshing memory, updating relationships—pushes entropy down temporarily. The moment maintenance stops, entropy resumes its upward trend. There is no permanent fix, only continuous effort.
Complexity increases vulnerability to entropy. A simple single-key custody arrangement has fewer components to fail. A complex multi-signature arrangement with distributed keys, multiple parties, and layered security has more components, each with its own decay trajectory. Greater security through complexity trades for greater entropy exposure.
Differential Decay Rates
Different components decay at different rates. Paper might last decades under good conditions. Batteries might fail in years. Memory of infrequently accessed information might degrade in months. The custody arrangement contains components aging on vastly different schedules.
Fast-decaying components set minimum attention intervals. If batteries need replacement every two years, the custody needs attention at least that often to remain functional. The shortest-lived critical component determines how long the arrangement can be left alone.
Slow-decaying components create false confidence. A seed phrase etched in metal seems permanent. Its longevity may obscure the faster decay of other components. The holder focuses on the durable element while ignoring the fragile ones.
Correlated decay affects multiple components simultaneously. Environmental conditions—humidity, temperature, physical disturbance—can accelerate decay across multiple components at once. A flooded basement damages paper, electronics, and metal together. Correlated decay can cause catastrophic failure rather than gradual degradation.
Information-Theoretic Entropy
Beyond physical decay, custody faces information-theoretic entropy. The usefulness of information depends on context that may itself degrade or vanish. Instructions that made sense to the holder may become incomprehensible to heirs who lack the original context.
Documentation degrades semantically. Words mean different things over time. Technical terms become obsolete. References to services or products become meaningless when those services and products disappear. The documentation remains physically readable while becoming informationally useless.
Knowledge transfer faces generational entropy. Each transfer loses fidelity. The holder explains to their heir, who understands imperfectly. That heir explains to the next generation, with further loss. Across generations, the original detailed understanding becomes vague awareness that something exists somewhere.
Ambient information infrastructure changes. File formats become obsolete. Software stops being maintained. Web links rot. Information that depended on external context becomes stranded as that context disappears. The custody documentation points to resources that no longer exist.
Maintenance as Negative Entropy
Maintenance inputs energy that temporarily reduces local entropy. Checking that devices work catches failures early. Refreshing memory reinforces fading knowledge. Updating contact information maintains relationship connectivity. Each maintenance action pushes back against natural decay.
Maintenance requires continued human involvement. Someone must care enough to spend attention on the custody arrangement. After the holder's death, that caring must transfer to heirs or administrators. If no one takes responsibility for maintenance, entropy proceeds unchecked.
Effective maintenance addresses the fastest-decaying components. There is no point in elaborately protecting a steel seed phrase while ignoring a dying battery in the hardware wallet. Maintenance effort should flow to whatever is most at risk, and that changes as different components reach different points in their decay curves.
Maintenance itself can introduce errors. Handling materials creates wear. Updating software can introduce bugs. Transferring information can corrupt it. The maintenance intended to reduce entropy may accidentally increase it. Careful maintenance matters as much as frequent maintenance.
The energy required for maintenance is not constant. As systems age and technology changes, keeping them functional requires progressively more effort. Software compatibility demands grow. Hardware becomes harder to source. The maintenance burden itself increases over time.
Entropy Across Custody Lifespans
Short-term custody faces minimal entropy exposure. Holding bitcoin for weeks or months unlikely to encounter significant decay in any component. The entropy rate over such short periods is negligible relative to the starting order.
Medium-term custody begins to encounter component failures. Over years, batteries die, software becomes outdated, and memories fade. Some maintenance becomes necessary. The holder must begin actively resisting entropy rather than simply ignoring it.
Long-term custody faces generational entropy challenges. Decades of holding mean multiple generations of technology change, multiple transfers of knowledge, and potentially multiple holders as the original holder ages and dies. The custody arrangement must survive conditions its designer cannot predict.
Indefinite custody is a race against entropy with no finish line. True generational wealth transfer means the custody arrangement must resist entropy indefinitely. This requires not just good initial design but mechanisms for ongoing maintenance across future generations who do not yet exist.
Implications of the Entropy Model
Treating custody as an entropy problem reframes how to think about it. The question shifts from "is my custody secure?" to "how long until my custody fails?" Security is not a binary state but a decay curve. Everything fails eventually; the question is when.
Redundancy combats entropy by providing backup paths when primary components fail. Multiple copies of information, multiple devices, multiple people with knowledge—each redundancy means that one component's failure does not immediately cascade to total failure. Redundancy buys time against entropy.
Regular testing reveals entropy that has already occurred. Checking whether access works catches failed components before they become urgent. Testing is measurement of the current entropy state. Without measurement, entropy accumulates invisibly until it prevents access.
Simplicity reduces entropy exposure by minimizing the number of components that can fail. A simpler arrangement with fewer parts has fewer decay vectors. The security benefits of complexity must be weighed against the entropy costs of additional components.
Assessment
Bitcoin custody entropy describes the tendency of custody arrangements to degrade toward inaccessibility over time. Physical materials decay, information degrades, memory fades, and relationships shift—all without active malicious intervention. Time itself is the adversary.
Different components decay at different rates, with the fastest-decaying critical component setting minimum attention requirements. Information-theoretic entropy affects the usefulness of documentation and knowledge even when physical media survives. Complexity increases entropy exposure through additional decay vectors.
Maintenance inputs energy that temporarily reduces entropy but requires continued human involvement. Long-term and indefinite custody face entropy challenges that compound across generations. The entropy model reframes custody from a security state to a decay curve, emphasizing redundancy, testing, and simplicity as strategies for slowing the inevitable progression toward disorder.
System Context
Protection Language Without a Protector
For anyone who holds Bitcoin — on an exchange, in a wallet, through a service, or in self-custody — and wants to know what happens to it if something happens to them.
Start Bitcoin Custody Stress Test$179 · 12-month access · Unlimited assessments
A structured, scenario-based diagnostic that produces reference documents for your spouse, executor, or attorney — no accounts connected, no keys shared.
Sample what the assessment produces