Gifting satoshis to future generations
Experience from storing bitcoins with a very long term mindset
Recently I’ve been tasked to gift some satoshis to a newborn baby, who is supposed to redeem them when he grows up, about 18 years from now. The challenge was trickier than originally expected, as there are many different ways to store bitcoin, each one with different trade-offs, and at the same time it’s hard to predict the state of the Bitcoin industry two decades into the future.
Make it future proof
The first problem I faced was the choice of the hardware support. Any electronic device faces forward compatibility issues, making it hard to predict which hardware tech will still be compatible in 18 years. If, for example, someone received today a floppy disk or a Sony minidisk from the ’90s, it would be very hard to find a device able to read it now. It is likely that the same problem will happen with USB sticks, so using a hardware wallet from 2019 may end up requiring multiple adapters to bridge between different communication standards. For this reason, avoiding electronic devices all together is definitely the best option, and using a physical support to write down your private key to be later imported in whatever wallet will be available in the future is so much more future proof.
However, the forward compatibility problem does not only affect the hardware, but also the standard we use to encode the private key. One of the things I wanted to avoid was the complexity introduced by seed derivation. A derivation standard that may be very popular today, such as BIP44 and BIP84, could easily go out of fashion and end up without significant support from walleting software, possibly requiring the beneficiary to derive manually from the seed in order to find the keys where the coins are (assuming you also provide the derivation scheme together with the seed). For this reason, the best way to encode the private keys is for sure the good old WIF standard, which is more likely to still be supported in the future, rather than some wallet specific HD scheme.
Choosing the support
There are multiple ways to put a WIF key on some sort of physical support, like for example the once very common paper wallets. However, to make our choice we should also keep in mind two other desirable features: the support should be durable, in order to avoid accidental losses, and, maybe even more importantly, it has to look precious, so that even non-bitcoiners (as the receiver’s parents were in my case) will more instinctively take the necessary precautions to keep it safe.
To achieve both objectives, a steel based solution seemed like the best option, as they are very resistant to accidental damages, and look more valuable than paper, wood or an electronic device. Some people may choose to opt for a home-made solution and engrave a private key on a steel plate, however this is a procedure that requires skills and access to the right tools. Luckily, on the market there are multiple steel based back-up solutions that can provide what we are looking for ( here you can find a review of many of them). In particular, those that looked more interesting to me were the two products from Cryptosteel: the Cryptosteel Capsule, and the Cryptosteel Cassette.
The main difference between the two products is that the Capsule, by being basically a tube with small steel plates with characters engraved on them, is stronger and cheaper, while the Cassette, having rails to hold the plates, is easier to read (which however in some cases can be a disadvantage) and can also support custom engraving on the side, which would make a present look nicer. I eventually opted for the Capsule, mostly for a cost reason: the version of the Cassette that supports the WIF format is €150 (not including the custom engraving on the side, if you want it), while the Capsule is just €90 (as of December 2019). All things considered, I preferred to add those €60 difference to the sats I was gifting, but depending on the amount of money you are planning to lock in the private key this difference may not be as relevant.
However, a major drawback that I noticed in the Capsule is that each steel plate has different symbols on the two sides, making each sequence of plates interpretable in two ways (or even four, if you consider that you can read the string in both directions), which is an issue that could be solved by simply providing more steel plates in the box. I personally tried to mitigate it by providing an attached piece of paper with instructions on how to read the plates. If the instructions are lost I guess a very small brute forcing will be required.
Setting up the string
It is possible to put up to 123 characters inside the Capsule, so, since a typical private key in WIF format only uses 53 characters, we have some space left to store extra information. Two things that would be incredibly useful are the output descriptor, and the format of the private key.
The output descriptor, i.e. in which standard template the money is locked (e.g. P2PKH, P2SH, P2WPKH, etc), will indeed prevent a lot of troubles if the wallet where the key will be imported does not automatically try the right template and find the output on the blockchain. Therefore, in the worst case scenario, with the output descriptor it should be possible to manually find the correct output on the blockchain and spend the coins. Similarly, making it explicit that the key is in the WIF format will avoid the need to guess how to interpret the string.
So, in my case, the string looked something like this:
'p2wpkh'/'WIF'/privateKeyTo avoid confusion, remember to put separators between the different segments of the string. Luckily, Cryptosteel provides them out of the box.
Add some extra instructions
While all the minimum necessary information needed to redeem the coins should be in the steel device, it certainly doesn’t hurt to add other data on an attached less durable support. So what I did was to also prepare a piece of paper where I suggested how to read the string and how to use it to get access to the money, putting emphasis on the need to learn more about Bitcoin technicalities and do some tests before actually proceeding with the redeem itself. In the paper I also put the Bitcoin address linked to the private key, and the ID of the transaction that sent money to that address, so in case syncing the blockchain becomes very expensive in the future, it will still be possible to manually create a valid spending transaction without having to rely on third parties.
Unfortunately, I couldn’t also include any recommendation on which software to use to import the private key, as I have no idea what will be available and still maintained in the far future, therefore all I could do was to recommend to do some research to find the best wallet supporting imports from WIF keys.
The final result
Last but not least, to expect people to take care of something, you have to make it look nice and precious, so after choosing the cool looking Cryptosteel Capsule, I decided to put it in one of those velvet boxes usually used for jewellery, just to remind that it is something of value and has to be taken care of, as if it were gold.
Hopefully my experience will be useful to others trying to do something similar. Bitcoin is a perfect tool to pass value across generations, so it is important to develop some best practices to do it properly.
