Imagine a future where 1 btc is worth $1m in 2020 dollars. In such a future, many current bitcoiners will possess significant wealth, in the form of bearer assets. This is good for all the reasons btc is good. However, it also means that a host of attacks become viable in ways they weren't before.
Sovereignty under pressure
We all know about the security issues of someone getting access to your wallet or seed words somehow, and many people mitigate those risks in different ways, such as memorizing seed words, printing out QR codes and hiding them in books, creating metal backups and putting them in fire safes.
But with these practices, a host of habeas corpus risks now increase dramatically, e.g., kidnappings and torture. If a villain gets their hands on you, and you have the power to give up your btc, either bc you have a hot wallet in your possession, can retrieve a hot wallet, possess a seedQR code, or have memorized your seed phrase -- in this circumstance, possessing your body is the equivalent of possessing your stack. Worse, it's not just your own body that must be secured; the body of anyone you care about is transformed into an attack surface.
This is the ultimate sovereignty: once compromised by this kind of attack, no one can help you. Settlement is final. Your funds are gone. Your fingers and toes are gone. Probably your life is also gone.
The game theory of these dynamics demands certain responses.
First, single sig, of any kind, is a dead end, not only for the hodler, but for everyone. If villains can reliably obtain funds by kidnapping and torture, they are incentivized to do so. In a fiat system, a credible deterrent is that transactions are reversible. In a btc system with final settlement, the only plausible deterrent is if kidnapping / torture will reliably not work bc a person, even subject to the highest levels of duress, cannot provide access to their btc under these scenarios.
If all that's true, how can the ecosystem around btc evolve to mitigate these new attack dynamics?
- multisig must become ubiquitous, and your ability to access your own stash quickly must end
- shared custody institutions like Unchained, Casa, and others will become the norm
- other types of shared custody institutions, like Fedimint-derived ones, and things that haven't been invented yet, will become invented and become popular
- social practices and institutions will evolve around these incentives
It also means that bad security on behalf of a single bitcoiner become security holes for all bitcoiners. If kidnappings / torture reliably produce btc results, then those practices will continue to be incentivized, and the ecosystem will adapt to normalize them, as they have in LatAm countries.
I know Andreas A, as a prominent holder of significant btc wealth, but as a guy who is not so rich that he can afford a contingent of bodyguards to surround him at all times, has mentioned similar security measures in the past for himself, though I don't have a reference handy; and I think he is dubious about the prospect for the average person.
Have others discussed this topic in depth? I'm particular interested in the institutional and cultural adaptation that must unfold -- social determinism unfolding in the face of technological determinism, as Lyn Alden might put it.