Bitcoin Custody Stress Test: Scenario Modeling Versus Static Review
Scenario-Based Testing for Custody Resilience
This memo is published by CustodyStress, an independent Bitcoin custody stress test that produces reference documents for individuals, families, and professionals.
What a Stress Test Does
A document lands on someone's desk. It describes what happens to Bitcoin when a person dies. It shows scenarios: the spouse cannot find the PIN, the executor does not know a seed phrase exists, the bank will not open the safe deposit box. The label says "bitcoin custody stress test."
The reader might expect a review. A review checks if the setup looks correct. Or they might expect an audit. An audit checks if rules were followed. Or they might expect a security check. A security check looks for ways a thief could break in.
A stress test is different from all of these. This memo explains what a bitcoin custody stress test does.
What a Stress Test Does
A bitcoin custody stress test asks one question: what happens when things go wrong?
The "wrong" is specific. Death. A stroke that leaves someone unable to speak. Divorce. A family fight over money. Each of these creates different problems. Each one makes the same Bitcoin setup behave in different ways.
The stress test does not look at the system when everything is fine. It does not ask if the hardware wallet is a good brand. It does not ask if the password is strong. It asks what happens when the person who knew the password is gone.
Picture this: The owner dies. The spouse finds a small device in a desk drawer. It is a Ledger—a hardware wallet that stores Bitcoin. She does not know it needs a PIN code to open. She does not know what a seed phrase is. A seed phrase is a list of 24 words that can restore the Bitcoin on a new device. She does not know this backup might exist somewhere. A stress test traces this path: what she finds, what she understands, and where she gets stuck.
Why the Scenario Matters
A stress test without a scenario means nothing. The same setup acts differently depending on what happens.
Here is an example. A Bitcoin owner uses something called multisig. Multisig means "multiple signatures." Moving the Bitcoin requires two out of three keys. The owner keeps two keys. A sibling keeps one.
When everything is normal, the owner can move the Bitcoin anytime. The owner has two keys. Two is enough.
Now imagine the owner dies. The spouse inherits everything. The court says she owns the Bitcoin. But she does not know where the owner kept those two keys. She calls the sibling. He has one key. He wants to help. But one key is not enough. She needs two. She has to find at least one of the owner's keys. If she cannot find it, the Bitcoin cannot move.
Now imagine something different. The owner has a stroke. The owner is alive but cannot talk or write. The spouse has no legal power yet. Getting legal power over someone who is still alive takes months. The sibling has one key but will not sign anything without hearing from the owner directly. The owner cannot speak. Same setup. Different scenario. Different result.
Structure Versus Behavior
A review lists what exists. A hardware wallet is in the safe. A seed phrase backup is in a bank box. Instructions are in a folder. Three people know different pieces. This is structure.
Structure does not tell us what happens next. The hardware wallet exists, but it wipes itself clean after three wrong PIN guesses. The seed phrase backup exists, but the bank box needs the dead person's signature to open. The instructions exist, but they mention software that no longer works.
When analysts stress test bitcoin wallet setups, they trace what happens when someone tries to follow the owner's instructions. The daughter reads the first line: "Open the Ledger Live app." She does not have this app. She downloads it. The app asks her to plug in the device. She does. It asks for a PIN. She does not know the PIN. The first instruction is blocked. The instructions were complete. The path forward is not.
Structure describes the pieces. Behavior describes what happens when someone tries to use those pieces. A stress test looks at behavior. A review looks at structure.
Time, Legal Power, and People
When someone dies, three things change: time, legal power, and who is around to help.
Time slows down. Probate—the court process for handling a dead person's property—takes months. Banks have waiting periods. Exchanges that hold Bitcoin want paperwork. A setup that works instantly for the owner might take six months for the executor. During those months, Bitcoin's price moves. Tax deadlines pass. Family members wait.
Legal power and technical access arrive at different times. The executor gets a letter from the court. This letter says they can manage the estate. But the letter does not include the PIN to the hardware wallet. It does not say where the seed phrase is hidden. Legal power and technical access are two different things. The stress test looks at what happens in the gap between them.
People change too. A sibling agreed to help with the multisig three years ago. Now that person is traveling. Or they do not answer calls. Or they do not want to deal with technical problems during a family crisis. The stress test asks: if this person is not around, what happens?
How a Stress Test Differs from a Review
A review looks at what exists right now. It lists the devices. It notes where backups are stored. It records who knows what.
A stress test asks what happens next. It picks a scenario—the owner dies—and follows the chain of events. Who finds out about the Bitcoin? How do they learn about it? What do they find? What do they understand? What can they do? Where do they get stuck?
A review might say: "Seed phrase is in a bank safe deposit box." A stress test asks: who can open that box after death? What papers does the bank need? How long does it take? What if the estate has no presence in that state?
The review describes what is. The stress test traces what happens.
How a Stress Test Differs from an Audit
An audit checks against a rulebook. Did the numbers match? Did the controls meet the standard? Did the process follow the rules?
A bitcoin custody stress test has no rulebook to check against. There is no official standard for Bitcoin custody. No government agency says what is correct. No group certifies that a setup meets a benchmark. The stress test cannot check compliance with a standard that does not exist.
Instead, the stress test describes what happens. Under these conditions, access remains viable. Under those conditions, access becomes blocked. Under other conditions, access works but takes months. The result is a description of behavior, not a grade.
How a Stress Test Differs from a Security Check
A security check asks: can a thief get in? It looks for weak spots. Can someone hack the account? Can someone steal the device? Can someone trick the owner into giving up the password?
A stress test asks something different. It assumes the person trying to get in has the legal right to be there. The spouse holds legal standing in the scenario. The executor holds legal authority. They are not breaking in. They are trying to use the front door with whatever keys the owner left behind.
A setup can look strong in a security check and still block the family. The system keeps thieves out. It also keeps the widow out when she does not have the PIN, cannot find the seed phrase, or does not know the seed phrase exists.
Security asks: can attackers get in? A stress test asks: can the owner's family get in?
Results Are Not Guarantees
A stress test produces a model. The model describes what happens under one scenario with certain assumptions. It is not a prediction. It is not a promise. It is not an endorsement.
The model depends on what information was provided. If a seed phrase backup exists but no one mentioned it, the model does not include it. The result shows what was modeled, not everything that exists.
The model depends on assumptions. It assumes certain people will act certain ways. It assumes banks will follow their stated rules. It assumes devices will work as expected. Any of these assumptions might be wrong when the real event happens.
The model applies to one scenario. A stress test that models death does not show what happens during a stroke. A stress test that models the spouse as heir does not show what happens if the spouse dies first. Different scenarios produce different results.
What Stress Tests Reveal
A bitcoin custody stress test shows gaps between what exists and what works.
It shows dependencies on people. A sibling holds a key. What if he moved? What if he died too? What if he forgot where he put it?
It shows dependencies on institutions. The bank controls the safe deposit box. The exchange controls the account. The probate court controls who has legal power. Each one adds delays, paperwork, and places where things can go wrong.
It shows dependencies on knowledge in one person's head. The owner knows the PIN. The owner knows which email connects to the exchange. The owner knows that "backup" means the metal plate in the filing cabinet, not the paper in the safe. When the owner is gone, that knowledge is gone—unless it was written down or shared.
The stress test makes these dependencies visible. It does not fix them. It describes what they are.
Reading the Results
A stress test result tells a story. Under this scenario, with this information, here is what happens. Access remains viable at this point. Access becomes blocked at that point. Delays happen here. Dependencies show up there.
The result is not a grade. It does not say the setup is good or bad. It describes what happens under certain conditions.
The result is not advice. It does not say what to change. It describes what happens if nothing changes.
The result applies only to the scenario that was modeled. A different scenario—different timing, different heirs, different market conditions—produces different results from the same custody setup.
The result is a snapshot in time. It shows the custody arrangement at the moment of the stress test. Changes made after the stress test are not in the results.
Outcome
A bitcoin custody stress test asks what happens when things go wrong. It picks a scenario—death, incapacity, dispute—and traces the path. Who finds the Bitcoin? What can they reach? Where do they get stuck?
This is different from a review, which lists what exists. It is different from an audit, which checks against rules. It is different from a security check, which looks for ways thieves can break in. A stress test models behavior under specific conditions.
The results describe one scenario based on the information and assumptions at the time. They show dependencies on people, institutions, and knowledge—dependencies that a simple list of devices and backups does not reveal.
System Context
Examining Bitcoin Custody Under Stress
Elemental Destruction as a Backup Test
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