Arpil2024 - BTC | Bitcoin Inheritance planning and Miniscript

Panel discussion about Bitcoin Inheritance planning and Miniscript: Youtube Talk

Introduction to Miniscript

• Miniscript is a developer tool enabling advanced Bitcoin smart contracts
• Works on Layer 1 without requiring forks
• Supported by major hardware wallets

“Miniscript is an amazing tool but the larger audience doesn’t need to hear about it - it’s a developer tool that empowers to build products and services”

Current Inheritance Problems in Bitcoin

• Traditional method of putting seed phrases in envelopes is risky
• Difficult to trust family members with complete access
• Challenge of balancing security vs. accessibility

“The worst thing you can ever do to a grieving spouse is give them a treasure map to try and find out where the money is”

TimeLocks and Smart Contracts

• Bitcoin can leverage time locks for inheritance planning
• Enables programmatic control over funds after specific time periods
• No automatic execution - requires human intervention

“You can have a key that doesn’t do anything but only if the funds sit still for a year then it can do something”

Multisig Solutions

• Evolution beyond simple 2-of-3 multisig setups
• Can combine multisig with time locks
• Enables complex security models

“What’s considered the state of the art in our industry in Bitcoin layer one is like a two out of three multi… come on this is pretty lame”

Corporate Use Cases [Enterprise Custody]

• Applicable for business continuity
• Useful for corporate treasury management
• Can implement governance structures

“Think about Michael Saylor with all of his Bitcoin - it’s not sitting in a ledger in his desk”

Risk Distribution

• Moving away from binary custody models
• Spreading risk across multiple parties
• Insurance implications

“Risk distribution is critically important… if you have customer A, B, and C and they each have their own bespoke vaults, an issue at one vault has no material impact on the other one”

Practical Implementation Challenges

• Time lock drawbacks (waiting periods)
• Need for simplification of user experience
• Technical complexity in building solutions

“The space is maturing and coming to a point where a lot of financial institutions will look to participate by offering the right kind of products”

Future Developments

• Banking integration possibilities
• Insurance solutions
• Social recovery mechanisms

“There are now new possibilities of managing this in a fail-safe way… you will never lose your funds ever”

Open Source Philosophy

• Everything discussed is open source
• Built on Layer 1 Bitcoin
• No tokens or proprietary solutions

“Everything is fully open source, you can just take the code run it, copy it if you want, do whatever you want… it’s free to use”

Importance of Testing and Documentation

• Regular practice with test wallets
• Documentation of processes
• Keeping software versions noted

“Having processes documented… this is a great place to have a party like a lawyer or you can just keep within the family”

The panel emphasized that while the technology is complex, the end goal is to make Bitcoin inheritance and security accessible and simple for users while maintaining the core principles of Bitcoin’s decentralization and security.

“The future is really bright… technically the future is really bright I think.” CopyRetrySGCan you rewrite the same again with detailed technical elements in each pointEditHere’s a technically detailed breakdown of the panel discussion:

Miniscript Technical Foundation

• A high-level programming language built on top of Bitcoin Script
• Enables standardized compilation and analysis of Bitcoin spending conditions
• Similar to how Java/C sits above low-level programming languages
• Allows for policy expressions to be converted into optimized Bitcoin Script

“Miniscript really enables that the timelocks are not new in Bitcoin, they exist forever… but nobody’s using them because everything had to be custom”

Current Bitcoin Inheritance Technical Challenges

• Single signature wallets create single points of failure
• Standard BIP39 seed phrases (12/24 words) lack programmatic controls
• Security risks with plain backup sharing
• No native “dead man’s switch” in basic Bitcoin transactions

“What people do and pretty much everyone does that and we shouldn’t be doing it is that we are basically giving a copy of this backup to our family”

Advanced Timelock Implementations

Two types: CHECKLOCKTIMEVERIFY (absolute) and CHECKSEQUENCEVERIFY (relative) Can be based on: Block height (Bitcoin blocks) Unix timestamp (calendar time)

• No automatic execution - requires transaction signing

“You can actually have a contract that expires January 1st and have the spending condition on January 2nd automatically be encoded into Bitcoin”

Complex Multisig Architectures

Beyond basic n-of-m schemes Combinations possible:

• Multisig of multisig (nested structures)
• Timelock + multisig hybrid conditions
• Dynamic participant addition after timelock expiry

“For what we’re doing is we’re offering insured Bitcoin custody leveraging our wallet called Trident… it is a multisig of multisig”

Corporate Implementation Details for Enterprise Custody

• UTXO management strategies
• Key management protocols
• Governance implementation through script policies
• Integration with existing business processes

“We have a two of two right now and if something happens to one of us it becomes a two of three with a third key that’s controlled by the company”

Technical Risk Distribution Methods

• UTXO segregation strategies
• Multiple vault architectures
• Cryptographic access control layers
• Independent key storage systems

“Internal actors who are most likely to commit the crime… you are able to mitigate that and as I mentioned before insurance contract expires, you’re able to go back to full control”

Smart Contract Capabilities in Bitcoin

Current limitations:

• No automatic execution
• No native asset splitting
• No covenants (yet)

Available features:

• Conditional spending paths
• Timelock controls
• Multi-party signing schemes

“Bitcoin smart contracts currently are not going to move your money by themselves… what we’re talking about here is just assigning the right to sign the UTXO”

Advanced Recovery Mechanisms

• Social recovery implementations
• Distributed key sharing protocols
• Emergency recovery procedures
• Backup key activation sequences

“You have three friends or three family members and each of you have three mobile phones and you have your keys distributed on mobile phones”

Technical Security Considerations

• Key generation procedures
• Entropy sources
• Backup strategies
• Hardware security module integration

“Don’t try to be smarter because that’s really how we do mistakes… just use some kind of a standard and miniscript is the path to that”

Implementation Best Practices

• Script optimization techniques
• Fee considerations with complex scripts
• Key rotation procedures
• Verification protocols

“Having processes documented where… noting what version of the software we’re using maybe having that sitting on a USB drive”

Additional Technical Elements:

Bitcoin Script Specifics:

• OP_CHECKSIG for signature verification
• OP_CHECKMULTISIG for multiple signatures
• OP_CSV and OP_CLTV for timelock implementation

Stack-based execution model

Wallet Integration Details:

1. Hardware wallet compatibility requirements
2. Software wallet implementation guidelines
3. Signature aggregation considerations
4. PSBT (Partially Signed Bitcoin Transactions) support

“Technically from a blockchain perspective… we cannot do a split let’s say if I have three kids I cannot split my wallet in 1/3 1/3 1/3 automatically from the Bitcoin perspective” The panel emphasized that while these technical implementations are complex, they’re essential for building robust, secure, and usable Bitcoin inheritance and security solutions. The goal is to abstract this complexity away from end-users while maintaining the security and trustlessness of Bitcoin’s base layer.

“The tools exist they are simple to use, they are hard to build… but you still need to figure it out”