CXK Capital

Bitcoin

[CXK Capital @CXKCapital]

How to set up a non-custodial Bitcoin inheritance plan while maintaining sovereignty and privacy.

Here’s the problem: you want to be able to transfer your Bitcoin to your heirs without relying on a third party who has de facto ability to control your assets, essentially a custodian, or even has knowledge of all your assets, representing some level of privacy risk. Existing inheritance services on the market typically use a multi-signature solution where a trusted third-party acts as a key agent, meaning they hold typically one of three keys, and you hold the other two. Since they don’t have a quorum of keys, they can’t take your Bitcoin, but they do have knowledge off all the assets that keyset is able to control. This means they know your financial information and could theoretically be compelled to disclose it, to a court or a government, or could potentially have their files accessed by a hacker or leaked by a careless or rogue employee. Surely, they take steps to mitigate these risks but on some level the risk remains.

For many people these “problems” represent acceptable tradeoffs and are a net improvement to their current set up. An inheritance plan currently available on the market, while imperfect, is better than no plan at all. For CXK it wasn’t good enough. Bitcoin offers sovereignty to an individual, without the need to rely on third parties. But sovereignty comes with personal responsibility, a steep learning curve, and its own risks and tradeoffs. Most people don’t want it, or rather they don’t want to expend the continued effort to maintain personal sovereignty. They want an easy solution, and trusting third parties is what they are used to. CXK was founded because we needed a solution that did not rely on a third-party who had knowledge of our assets, let alone control over them.

The best way to protect your sensitive information from not being leaked or lost or hacked or disclosed to an Authority is to ensure that no one besides you has access to it. But then how do you convey it to your heirs when you die? This is the problem we have set out to address. It would be a tragedy if you spent a lifetime accumulating Bitcoin only to see it lost forever because you didn’t have a plan in place.

If you choose the path of personal sovereignty, and with-it total responsibility, first off, congratulations, you are amongst an elite minority. And if you are a Bitcoiner doing this, you are in the minority of a minority. CXK has chosen the same path and has thought through many of the risks this path entails and how to mitigate them. We are always on the lookout for new risks and weaknesses in our own set up, as the price of freedom is eternal vigilance.

Some of these risks include:

1. The $5 wrench attack as enumerated here: Basically, you can’t have your sensitive information on your person or at your home or you can be physically attacked to extract the information.

2. Jurisdictional Risk: If all your sensitive information is in a single jurisdiction, a local court/government can access it, for some people who live in less than perfect societies, this is not an acceptable risk.

3. A lack of redundancy: You want to have backups for your backups, so if one fails you have time to repair or replace it. Remember, the price of freedom is eternal vigilance.

4. Overcomplexity which can lead to User Error: This one is tricky, as you must learn new techniques, software, devices, protocols, lifestyles, etc. AND THEN be able to convey certain skills and knowledge to your heirs in a way they can understand.

5. Single Vendor Risk: To the extent that you employ technology and devices, using a single vender opens you to risk that they fail or become compromised. This includes any hardware signing devices or software you may need to manage your assets.

6. CXK Capital and or any other company you may work with. CXK is just a company that exists for a moment in time, it is not eternal. Your assets need to outlast CXK, and your attorney, tax accountants, even your government. We wouldn’t trust another company – it is what spurred our founding in the first place – and we don’t expect or want you to trust us either. Everything we do is designed to outlast us and not need us. This also means being subpoena resistant, we don’t want knowledge of what you have so we can’t be compelled to divulge said knowledge.

In future articles we will discuss these risks in greater detail. They are always on our mind and represent the daily grind of what CXK endeavors to address, first for our assets, and then for potentially yours. We don’t want to necessarily invent our own solutions for each risk, that is unless it really doesn’t exist in the market. All the risks listed above have been thought about by past Bitcoiners who have come up with some excellent best practices that have been tested again and again. Just like how the cryptography that Satoshi chose to use for Bitcoin wasn’t the newest bleeding edge technology, but rather it was well known, researched and tested technology. We take the same approach. We have committed to building a robust and resilient plan for our estate which we can maintain for the rest of our lives, for the benefit of those we love and will bestow our Bitcoin to. Please read our future articles which we hope will be informative and if you feel our experience and service may be of value to you and your family, we would love to hear from you.

[CXK Capital @CXKCapital]

@BritishHodl Coinbase Custody, who secure IBIT, uses hardware signing devices that are not immune to the same attack vector.

[CXK Capital @CXKCapital]

@Seraphinaf5 71

[CXK Capital @CXKCapital]

Imagine capitulating and selling #Bitcoin at 112k this morning because you thought we were in a bear market.

[CXK Capital @CXKCapital]

What's the risk of working with a company on your Bitcoin Inheritance Plan?

One of the foundational reasons for establishing CXK Capital was we did not want to rely on any one company to keep our inheritance plans secure. Imagine you are in your 40’s and you are trying to set up an Inheritance Plan which you hope won’t need to be activated for another 40 years. It is quite likely that most of the companies you deal with today will not be around in 40 years.

Our mission at CXK is to help get you to a point where you can manage your Inheritance Plan without us, which is not a very good business strategy if you want to retain clients, but it’s the product we wanted for ourselves. This means you will have possession of all information needed to walk away at any moment should you choose. We also don’t want to be in a position where if CXK was compromised it would put our clients at risk. So we don’t collect sensitive information, don’t want to know how much Bitcoin you have or where it is stored or what your home address is. What we do want to do is come along side you and your beneficiaries as a consultant to help establish and execute your plan, in a way that protects your privacy.

Compare this to many existing Bitcoin Inheritance plans available on the market, for example with collaborative custody where they control one of the signing keys, the company will know exactly how much Bitcoin is secured through their plan, and even if they don’t control a quorum of keys to move your Bitcoin, when one plans for decades in the future, CXK considers it too risky for any one company to know how much you have.

Here's the main tradeoff, if you work with CXK as compared to a collaborative custody company, you will have to do more of the work and take responsibility for the management and upkeep of your private keys. We will help, of course, but our protocols, which we implement for our own Bitcoin Inheritance Plan, require ongoing maintenance. We think it’s worth it if you are securing a meaningful amount of Bitcoin.
Why hire us? This is something that we do full time and have spent years developing to be able to manage our own assets and it wasn’t until we were comfortable with the protocols for our own assets that we went live with CXK. And you can be assured we will continue to develop our skills because it is for our own assets, what CXK is offering is to make available some of that hard earned experience to you and your loved ones.

[CXK Capital @CXKCapital]

We thought @natbrunell did a fantastic job moderating @PeterSchiff yesterday.

[CXK Capital @CXKCapital]

Jurisdictional Risk to Bitcoin:

Do you live in a high trust society? Free from overly zealous attorneys, and with honest politicians and a court system you can trust? If so, this risk may not be something you have to spend too much time worrying about. For everyone else, the risk is real. And it may not be today but imagine a big change in the next election cycle, if the other team gains power. Or imagine if the sovereign debt crisis really kicks off, would you still trust your government if they were facing bankruptcy?

When you are formulating an inheritance plan you have to think decades into the future and plan for possible scenarios that seem remote today but could become real in the future.

Bitcoin is an immaterial asset, its network is global, the plane it exists on is outside of a nation’s territorial sovereignty. Even legal concepts like registered ownership, in the traditional sense, break down when applied to Bitcoin as there is no “official” property registry pertaining to Bitcoin. What matters with Bitcoin is the ability to control some of it, which means having possession of the private keys and other information needed to construct and sign a valid transaction. And one of the ways to mitigate Jurisdictional Risk, if you don’t reside in a great society, is to use a multi-jurisdictional multi-signature scheme. What this means is spreading a quorum of private keys in different jurisdictions so that no single jurisdiction has control. There is a lot of nuance to consider in this and a lot depends on what passport you hold, and the pros and cons of each different candidate country you want to store a key in. You also have to keep in mind, as we learned during COVID, that international travel can become temporarily restricted. Storing your keys in different jurisdictions may not be for everyone, but it is a strategy worth considering. At CXK we have experience in multiple countries and would be happy to discuss with you and formulate a plan to employ a multi-jurisdiction strategy to protect you and your family, if it makes sense for your particular situation.

[CXK Capital @CXKCapital]

Bitcoin just hit ATH, after celebrating spare a thought for your security and inheritance plan. Because Bitcoin's price moves, like life, comes at you fast.

[CXK Capital @CXKCapital]

What just happen with @Coinbase, and which people are calling a "hack", wasn't a hack. It was rogue contractors working for Coinbase who were bribed to release private customer information. With that information criminals are able to target Coinbase users, even physically at their homes. This highlights the dark side of KYC. No database is impenetrable, No company has 100% honest staff who wouldn't sell your data given the right price. Coinbase will take measures to "strengthen their internal systems" but it is a Sisyphean task. The only way for a company to protect their customers personal information is to not even have it, which because of KYC rules, is impossible for companies like Coinbase.

At CXK we were founded with this risk in mind and seek to design our services around it. As a company we do not want, nor need to know sensitive information that can be leaked/lost/sold and will endanger our clients if bad actors get ahold of it.

[CXK Capital @CXKCapital]

The $5 Wrench Attack:

Bitcoin is a self-custodial asset, whereas fiat wealth is typically held in banks. While Bitcoin offers sovereignty to an individual to be able control their wealth, it also invites violence from would be bank robbers who are just following the money. Jameson Lopp (https://t.co/ygOIVb4Kvt @lopp) keeps a good running list of known physical attacks against those dealing with digital assets here: https://t.co/e49PJVNjGp.

This is not a fun scenario to think about but aside from attacks against you, adversaries can do things like kidnap your loved ones and demand a ransom. When your money was sitting in a bank, criminals did not have the same incentive of a big payoff by attacking you, instead they would target the bank. In CXK’s view, as Bitcoin grows in value so too will violence against those who own it. So, if you’re going to take control of your wealth without using a third-party custodian you have to increase your security and make it too costly for someone to target you and as well as remove the ability to control your assets at home or on your person, therefore you have significantly reduced the potential payoff of someone targeting you. After that there’s the usual advice of don’t flaunt your Bitcoin wealth on social media, don’t tell others what you have, basically don’t make yourself into a target.
Physical security of you, your home and your loved ones is such a broad and deep topic with lots of rabbit holes to fall down.

A good principle to start from, in our humble opinion, is to raise the cost of attack to be so high above the potential payoff that criminals will not consider it worth their effort. One of the ways to accommodate for this is to design a security plan as if your Bitcoin was worth 10x what it is today. This means you are ahead of the curve in case Bitcoin goes on a large bull run and not playing catch up with your security.
Some of the essential things you must secure are:

1. Private Keys: These are your seed phrases and can also be held in any signing devices, like hardware wallets you may have. For these, geographically distributed multi-sig is a super-power. You don’t want to have the ability to unilaterally sign a Bitcoin transaction at home or in one single location. By geographically separating a quorum of signing keys you make a smash and grab attack impossible to execute. How far apart are your keys and how many hurdles you have to go through to access each of them depends on the value of assets you are protecting and how much inconvenience you are willing to tolerate to sign a transaction.

2. Muti-sig Descriptors: If you employ a multi-sig strategy, this is extra meta data in addition to your private keys which you must have in order to reconstruct the software wallet needed to create a valid transaction to spend your Bitcoin. By itself wallet descriptors are not enough to be able to sign a transaction (for that you need a quorum of private keys) but anyone who has these descriptors, for example if you use a third-party key agent, has the ability to see all Bitcoin controlled by that multi-sig scheme and monitor every transaction; it is a privacy risk. Your heirs will also need this information, in addition to a quorum of private keys to be able to access your Bitcoin if you’re unable to be there to assist.

3. Details and records of what you have: This is general advice, but just how most people don’t walk around sharing their bank statements with others, you want to exercise the same discretion with how much Bitcoin you have. Remember that the rule of thumb is to treat your Bitcoin as if it is worth 10x what it is today. The less that anyone knows the better you are protected in the future. It is CXK’s view that any data recorded electronically anywhere, like in a Company’s database, is at risk. Even if it is on your personal devices, it could be at risk from a home invader accessing it, or a corrupt border guard if you travel, and even if you do not have the keys available to access the Bitcoin, you’d rather not even have to explain that to someone nefarious who’s looking for something of value.

4. Your Mobile Phone: This could be considered part of the previous point, but we believe that your mobile phone contains so much personal information about you, and is constantly tracking you, that it warrants its own discussion. Consider that on most people’s phones they have many communication apps, like email, social networking, banking etc., and they are usually logged into these apps. The amount of sensitive information a motivated attacker can access is a major risk to think about.

The $5 wrench attack is something we hope you never have to face. Unfortunately, with Bitcoin’s nature of being a bearer asset, this is something every Bitcoiner has to think about and mitigate against. But thankfully there are well proven techniques to both reduce any payoff of this attack and increase the cost to the point where a potential attacker will choose to move on to someone else. CXK is available to discuss this risk, and others with you, and formulate a plan to protect you and your family.

https://t.co/jSG3YiHQ7t

[CXK Capital @CXKCapital]

How to set up a non-custodial Bitcoin inheritance plan while maintaining sovereignty and privacy.

Here’s the problem: you want to be able to transfer your Bitcoin to your heirs without relying on a third party who has de facto ability to control your assets, essentially a custodian, or even has knowledge of all your assets, representing some level of privacy risk. Existing inheritance services on the market typically use a multi-signature solution where a trusted third-party acts as a key agent, meaning they hold typically one of three keys, and you hold the other two. Since they don’t have a quorum of keys, they can’t take your Bitcoin, but they do have knowledge off all the assets that keyset is able to control. This means they know your financial information and could theoretically be compelled to disclose it, to a court or a government, or could potentially have their files accessed by a hacker or leaked by a careless or rogue employee. Surely, they take steps to mitigate these risks but on some level the risk remains.

For many people these “problems” represent acceptable tradeoffs and are a net improvement to their current set up. An inheritance plan currently available on the market, while imperfect, is better than no plan at all. For CXK it wasn’t good enough. Bitcoin offers sovereignty to an individual, without the need to rely on third parties. But sovereignty comes with personal responsibility, a steep learning curve, and its own risks and tradeoffs. Most people don’t want it, or rather they don’t want to expend the continued effort to maintain personal sovereignty. They want an easy solution, and trusting third parties is what they are used to. CXK was founded because we needed a solution that did not rely on a third-party who had knowledge of our assets, let alone control over them.

The best way to protect your sensitive information from not being leaked or lost or hacked or disclosed to an Authority is to ensure that no one besides you has access to it. But then how do you convey it to your heirs when you die? This is the problem we have set out to address. It would be a tragedy if you spent a lifetime accumulating Bitcoin only to see it lost forever because you didn’t have a plan in place.

If you choose the path of personal sovereignty, and with-it total responsibility, first off, congratulations, you are amongst an elite minority. And if you are a Bitcoiner doing this, you are in the minority of a minority. CXK has chosen the same path and has thought through many of the risks this path entails and how to mitigate them. We are always on the lookout for new risks and weaknesses in our own set up, as the price of freedom is eternal vigilance.

Some of these risks include:

1. The $5 wrench attack as enumerated here: Basically, you can’t have your sensitive information on your person or at your home or you can be physically attacked to extract the information.

2. Jurisdictional Risk: If all your sensitive information is in a single jurisdiction, a local court/government can access it, for some people who live in less than perfect societies, this is not an acceptable risk.

3. A lack of redundancy: You want to have backups for your backups, so if one fails you have time to repair or replace it. Remember, the price of freedom is eternal vigilance.

4. Overcomplexity which can lead to User Error: This one is tricky, as you must learn new techniques, software, devices, protocols, lifestyles, etc. AND THEN be able to convey certain skills and knowledge to your heirs in a way they can understand.

5. Single Vendor Risk: To the extent that you employ technology and devices, using a single vender opens you to risk that they fail or become compromised. This includes any hardware signing devices or software you may need to manage your assets.

6. CXK Capital and or any other company you may work with. CXK is just a company that exists for a moment in time, it is not eternal. Your assets need to outlast CXK, and your attorney, tax accountants, even your government. We wouldn’t trust another company – it is what spurred our founding in the first place – and we don’t expect or want you to trust us either. Everything we do is designed to outlast us and not need us. This also means being subpoena resistant, we don’t want knowledge of what you have so we can’t be compelled to divulge said knowledge.

In future articles we will discuss these risks in greater detail. They are always on our mind and represent the daily grind of what CXK endeavors to address, first for our assets, and then for potentially yours. We don’t want to necessarily invent our own solutions for each risk, that is unless it really doesn’t exist in the market. All the risks listed above have been thought about by past Bitcoiners who have come up with some excellent best practices that have been tested again and again. Just like how the cryptography that Satoshi chose to use for Bitcoin wasn’t the newest bleeding edge technology, but rather it was well known, researched and tested technology. We take the same approach. We have committed to building a robust and resilient plan for our estate which we can maintain for the rest of our lives, for the benefit of those we love and will bestow our Bitcoin to. Please read our future articles which we hope will be informative and if you feel our experience and service may be of value to you and your family, we would love to hear from you.

[CXK Capital @CXKCapital]

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