Would Your Bitcoin Survive a Natural Disaster?
This article explores the potential risks to Bitcoin storage during events such as natural disasters, using the recent devastating wildfires in Los Angeles as a backdrop. It reflects on the emotional, financial, and infrastructural toll of such catastrophes, emphasizing how vulnerable individuals are when it comes to relying on government services and traditional safety nets. The piece draws a parallel between these real-world threats and the need for Bitcoin holders to consider how their wealth, stored through self-custody, could be jeopardized in similar circumstances.
Lessons from the Los Angeles Wildfires
The article starts by describing the destruction caused by the fires in Los Angeles, where many have lost homes, livelihoods, and entire communities. The disaster has exposed significant failures in state preparedness, with fire hydrants running dry and poor forest management worsening the fire’s spread. The emotional toll is compounded by frustration towards government officials, especially as insurance companies cancelled fire policies in the lead-up to the disaster. This situation serves as a stark reminder that individuals cannot rely on the state to protect their wealth and property in times of crisis.
The writer then shifts to discussing Bitcoin, with some Bitcoiners using the fire to argue that Bitcoin is a safer alternative to owning property. While it is true that Bitcoin’s distributed network should theoretically remain intact as long as nodes exist globally, the author stresses that storing Bitcoin safely is not guaranteed in the event of a disaster. If private keys are stored locally—such as on a paper wallet or electronic device—they can be destroyed along with your property in a fire or other catastrophe. The example of the wildfires demonstrates that people’s Bitcoin could be as vulnerable as their homes if it is not properly safeguarded.
The Importance of Redundancy in Bitcoin Self-Custody
The core message of the article is that Bitcoin holders must implement redundancy in their self-custody strategies to protect their wealth from catastrophic loss. Several methods for improving the security and durability of Bitcoin storage are discussed:
- Geographic Distribution:
One of the primary strategies for redundancy is geographic distribution, which means storing copies of critical data—such as seed phrases—in multiple locations. This helps protect against localized threats like fires or floods. The article suggests using multi-signature wallets, where multiple keys are required to move funds, and storing those keys in separate locations to ensure they are not all destroyed in one event. - Durability of Storage Medium:
The article emphasizes that the storage medium for Bitcoin keys should be durable enough to withstand natural disasters. Paper wallets are not sufficient, as they are vulnerable to physical destruction. Offline hardware wallets (HWWs) are better, but they too can fail over time or be damaged in a disaster. Metal, especially in the form of metal plates, is recommended as a more durable alternative. However, even with metal storage, redundancy is essential. The article suggests combining storage methods, such as committing seed phrases to memory, though this comes with its own risks (e.g. memory loss due to injury). - Encrypted Vaults:
For online storage, encrypted vaults are mentioned as a way to protect critical Bitcoin data. However, this introduces the need for redundancy in the form of encrypted backups and secure password management. The writer highlights the importance of ensuring that backup methods and access protocols are resilient to a range of threats. - Access Protocols:
Beyond physical storage, it’s important to have access protocols in place for situations where the Bitcoin holder is incapacitated or unavailable. The article suggests creating clear instructions for family members or trusted individuals on how to access the Bitcoin in the event of an emergency and ensuring that these instructions are securely stored and only accessible to the right people. - Distributed Bitcoin Nodes:
On a broader scale, the article proposes extending redundancy to Bitcoin’s network itself. Running multiple geographically distributed Bitcoin nodes can ensure continued access to the Bitcoin network if one node goes offline due to a disaster. This redundancy helps maintain sovereignty over one’s transactions and privacy.
Scenario Planning for Bitcoin Security
The article stresses the importance of scenario planning for Bitcoin holders. By anticipating potential risks, such as the failure or loss of a hardware wallet, the destruction of physical backups, or a regional disaster, Bitcoin holders can create a robust plan to recover funds and maintain access to their wealth. The writer provides a series of thought-provoking questions, such as: “What do you do if your hardware wallet fails or goes missing?” and “How would you recover your Bitcoin if all your devices are destroyed in a disaster?”
Scenario planning also extends to the consideration of extreme events like solar flares or EMP attacks. While this may seem extreme, the article argues that even small, inexpensive investments—like Faraday bags to protect electronics—can add an additional layer of protection.
Conclusion: Protecting Wealth with Bitcoin
The article concludes by acknowledging the devastation of the Los Angeles wildfires and expressing sympathy for the victims. It reiterates that these events highlight the reality that government protection may not be reliable during crises. The writer encourages readers to take personal responsibility for their wealth and to prepare thoroughly for worst-case scenarios, ensuring that their Bitcoin remains safe and accessible regardless of the circumstances.
In essence, the article calls for Bitcoin holders to think critically about the risks to their self-custody setup and to take proactive steps to safeguard their wealth against disasters. By diversifying storage, strengthening security, and planning for various eventualities, Bitcoin holders can improve their chances of protecting their assets in the face of unforeseen challenges.