When You Know Bitcoin Exists But Cannot Prove It

Ownership Knowledge Without Supporting Evidence

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

The Nature of the Evidence Gap

Someone knows that bitcoin exists. Maybe they saw it themselves. Maybe the holder told them. Maybe they were there when it was purchased. The knowledge is real. But when the time comes to demonstrate that the bitcoin exists—to an estate, to other heirs, to a court, to a tax authority—they find they cannot prove it. The situation where you know bitcoin exists but cant prove bitcoin exists creates an evidence gap that no amount of certainty can bridge.

This memo examines how personal knowledge differs from provable knowledge, and what happens when the gap between them cannot be closed. The bitcoin may truly exist. The person may genuinely know this. But knowing and proving are different acts, and institutions and other parties operate on proof, not personal conviction.

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The Nature of the Evidence Gap

Evidence is external. It exists apart from the person who holds knowledge. A document is evidence. A transaction record is evidence. A photograph, a receipt, a signed letter—these are evidence. Personal memory is not evidence in the same sense. Personal certainty is not evidence. The gap forms when someone holds knowledge internally but lacks the external materials that would demonstrate that knowledge to others.

Bitcoin creates this gap readily. The asset exists on a public ledger, but the ledger does not label ownership. Looking at a bitcoin address shows that bitcoin is there. It does not show who owns it. The owner knows they own it because they hold the keys. If the keys are lost or the owner is gone, proving the connection between a person and an address becomes difficult.

Traditional assets come with ownership infrastructure. Bank accounts have names attached. Deeds record property owners. Brokerage statements list account holders. This infrastructure generates evidence continuously. Bitcoin in self-custody has no such infrastructure. The evidence of ownership exists only where the holder created it. If they did not create it, no evidence exists.

The person who knows the bitcoin exists may feel frustration. Their knowledge is genuine. They are not lying or confused. But the world beyond their mind requires more than their word. Others have no access to their memories or their certainty. Others can only see what can be shown. If nothing can be shown, the knowledge remains trapped in one mind, unable to produce effects in the external world.

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Sources of Knowledge Without Evidence

Knowledge without evidence arises in several ways. The most common is verbal communication. The holder told someone about their bitcoin. They described how much they had, where they kept it, what their plans were. The listener now knows. But conversation leaves no trace. Unless the conversation was recorded or summarized in writing, the knowledge transferred but no evidence was created.

Observation creates knowledge without evidence. A spouse sees the holder using a bitcoin wallet. A child watches their parent check a balance. An executor finds a hardware device among belongings. These observations generate knowledge that bitcoin exists. They do not generate documentation of that bitcoin's existence in a form others would accept.

Participation creates knowledge without evidence. Someone helped the holder set up their wallet years ago. They remember the process. They remember that bitcoin was deposited. But their participation was not documented. Their memory of participating is not the same as records of what was set up.

Inference creates knowledge without evidence. Financial patterns suggest bitcoin ownership. Unusual purchases. Unexplained wealth. Interest in cryptocurrency topics. Someone who knows the holder well may infer bitcoin ownership from these signals. The inference may be correct. But inference is not evidence. Inferring that something exists is not proving that it exists.

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Where the Gap Matters

The gap between knowing and proving matters wherever third parties require proof. Estate administration requires accounting for assets. If bitcoin exists but cannot be proven to exist, it cannot be included in the estate inventory. The executor who knows about it faces a choice: omit it and potentially face liability later, or include it without evidence and face questions about where the proof is.

Tax authorities require reporting of assets. The value of bitcoin held at death may be taxable. But reporting requires documentation. An heir who knows bitcoin existed but cannot prove it cannot produce documentation for the tax return. Reporting knowledge without evidence invites scrutiny the heir cannot satisfy.

Other heirs require evidence for fair distribution. If one heir knows about bitcoin and others do not, asserting its existence without proof creates conflict. The other heirs may doubt. They may suspect the asserting heir of fabricating a claim. Without evidence, the assertion looks like just a statement, indistinguishable from wishful thinking or worse.

Courts require evidence to adjudicate disputes. If a question about bitcoin ownership reaches a court, the court decides based on what can be proven, not what is known. A party who knows the truth but cannot prove it loses to a party who can prove a different story. Courts are evidence-processing systems. Knowledge that cannot be externalized cannot enter the system.

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The Blockchain Does Not Help

People sometimes assume the blockchain provides proof. The blockchain is public. Every transaction is recorded. This transparency seems like it would help. In practice, it often does not.

The blockchain shows that bitcoin exists at certain addresses. It does not show who controls those addresses. Knowing that an address holds bitcoin is different from proving that a specific person controlled that address. The blockchain is a record of movements, not a record of identities. It was designed to work without identity. This design feature becomes an evidence problem in inheritance scenarios.

If the person who knows about the bitcoin also knows the relevant addresses, they can point to the blockchain and say, "Look, the bitcoin is there." But this does not prove the deceased owned those addresses. Anyone can point to any address on the blockchain. Pointing is not ownership. Without evidence linking the deceased to the address—such as records, correspondence, or key materials—the pointing proves nothing about who owned the bitcoin.

The blockchain also does not show what happened to bitcoin. An address may have held bitcoin once but been emptied. Someone who knew about bitcoin may be pointing to a historical state, not the current state. The bitcoin they knew about may have been moved, spent, or lost. The blockchain records this but does not explain it. The person who cant prove bitcoin exists may not even be able to prove it still exists.

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Memory as a Weak Foundation

Memory is where the knowledge lives when evidence is absent. The person remembers what they saw, heard, or participated in. Memory feels solid from the inside. But memory is not reliable from the outside. Others know that memory distorts, forgets, and reconstructs. Relying on memory alone places the entire claim on the weakest possible foundation.

Time degrades memory. Details fade. Numbers become uncertain. What seemed clear years ago becomes fuzzy. The person may remember that bitcoin existed but not remember key details: how much, which wallet, when purchased. Partial memory is less convincing than complete memory, and both are less convincing than documents.

Stress affects memory. Inheritance situations involve grief, pressure, and often conflict. These conditions do not improve memory accuracy. A person under stress may misremember details they would have gotten right in calmer times. Their sincerity does not improve their reliability. They are doing their best to recall what they know. Their best may not be accurate.

Other parties have reasons to doubt memory. Someone claiming that bitcoin exists has an interest in that claim being believed. If the claim is believed, they may benefit. This interest does not make the claim false. But it gives others reason to want corroboration beyond memory. Without corroboration, memory alone carries the full weight of proof. Memory is not built for that weight.

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The Asymmetry of Proof

Proving that something exists differs from proving that it does not exist. The person who knows bitcoin exists needs to produce evidence of existence. If they cannot, they fail. The person who doubts bitcoin exists does not need to prove a negative. They simply point to the absence of evidence and let that absence speak.

This asymmetry favors doubt. In any dispute about whether bitcoin existed, the side that doubts starts ahead. They have no burden. The side that asserts existence carries the entire burden. If they cannot meet it, doubt wins by default.

The asymmetry operates regardless of truth. Bitcoin might truly exist. The holder might truly have owned it. But if existence cannot be proven, the true state of the world becomes irrelevant to the practical outcome. Outcomes follow evidence, not reality. When evidence is missing, outcomes diverge from reality.

The person who knows faces this asymmetry alone. They know. Others doubt. They cannot shift the burden back to the doubters. They cannot ask the doubters to prove that the bitcoin does not exist. The structure of proof places them in a losing position if they lack evidence, regardless of what they know.

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Consequences of the Gap

When someone cant prove bitcoin exists despite knowing it does, several consequences follow. The bitcoin may be excluded from estate accounting. It may never be reported to tax authorities. It may never be distributed to heirs. The asset exists in reality but not in any administrative process.

This creates a kind of ghost asset. Something is there. Something has value. Something belongs to someone. But the something cannot enter the normal processes by which assets are identified, valued, and transferred. The ghost haunts the inheritance without ever becoming tangible.

The person who knows may feel isolated. They hold knowledge no one else accepts. They may be accused of lying or fantasizing. They may be dismissed as confused. The gap between their certainty and others' skepticism creates interpersonal friction. Relationships strain when one person insists on knowledge others cannot verify.

The bitcoin itself may eventually become permanently inaccessible. If no one can prove it exists, no one may even try to recover it. The recovery attempt requires at least a belief that there is something to recover. If that belief cannot be established, the attempt never begins. The bitcoin remains wherever it is, controlled by keys no one can find because no one is looking.

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Assessment

The situation where someone cant prove bitcoin exists despite knowing it does represents an evidence failure distinct from access failure. The bitcoin may exist. The knowledge may be genuine. But knowledge held in one mind cannot be shown to others without external evidence. When evidence is absent, knowledge stays trapped.

Third parties require proof to act. Estates, tax authorities, courts, and other heirs operate on what can be demonstrated, not what is claimed. The gap between knowing and proving becomes a gap between internal truth and external reality. Outcomes follow external reality because that is all third parties can access.

The blockchain does not bridge this gap. Memory does not bridge it. Certainty does not bridge it. Only evidence bridges it, and evidence is what is missing. The person who knows remains in a position where their knowledge cannot produce effects in the world until they find or create the evidence that transforms knowing into proving.

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System Context

Examining Bitcoin Custody Under Stress

Bitcoin Custody Overlooked Risks

How Will Family Know What to Do With Bitcoin as a Knowledge Transfer Gap

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