Quantum Threats, Insurance, and Long-Term Planning

Quantum Computing: An Honest Assessment

Every few months a headline announces that quantum computers have broken encryption. These headlines are almost always wrong about the specifics. Here is the accurate picture as of early 2026.

Where the technology actually stands

Google's Willow processor, announced in December 2024, achieved 105 physical qubits and demonstrated quantum advantage on a specific benchmark problem. It can solve certain computational tasks faster than classical supercomputers. The task it demonstrated on was intentionally designed for quantum systems; it is not a general-purpose cryptographic attack capability.

Breaking secp256k1 (the elliptic curve used by Bitcoin and Ethereum) requires approximately 1,200 logical qubits. Logical qubits require error correction because physical qubits are noisy and error-prone. Current error correction overhead means each logical qubit needs hundreds to thousands of physical qubits. At today's error rates, you'd need millions of physical qubits to produce 1,200 logical qubits. Google has 105 physical qubits.

Other quantum efforts run on parallel timelines. IBM published its Heron R2 processor in late 2024 at 156 physical qubits, with improved error rates over Google's Willow. Its experimental Condor chip reached 1,121 physical qubits in 2023, but Condor was designed to test scaling rather than to run useful computation. IBM's public roadmap targets a 100,000-qubit architecture (Quantum System Two scaling) by 2033. Microsoft took a different path with Majorana 1, announced February 2025, which uses topological qubits built from a new class of materials Microsoft calls topoconductors. The first Majorana 1 chip has 8 qubits, but the architecture is theoretically more error-resistant than transmon-based approaches. None of these systems is close to the 1,200 logical qubits secp256k1 actually requires.

Google's internal planning target is post-quantum migration readiness by 2029. This refers to Google migrating its own infrastructure to quantum-resistant algorithms, not Google building an attack capability. The honest expert consensus: 10-15 years before a cryptographically relevant quantum computer exists, with substantial uncertainty in both directions.

NIST post-quantum standards (finalized August 2024)

NIST finalized three post-quantum cryptographic standards after a six-year competition involving submissions from cryptographers worldwide:

What the blockchain networks are doing

Crypto Insurance

Under 20% of crypto holders have any insurance coverage. The market grew 140% year-over-year in 2025. Several real products exist.

The GENIUS Act, signed July 2025, applies specifically to stablecoin issuers. It requires 1:1 dollar reserves and audit disclosures for issuers like Circle and PayPal. The bill does not directly mandate insurance for exchanges or custodians broadly. The wider 2025 regulatory direction (FIT21 House passage, OCC custody guidance, SEC SAB 122 supersession of SAB 121) has pushed institutional custodians toward more transparent reserve disclosures and insurance attestations, but no general insurance mandate exists for retail exchanges as of early 2026.

Custodian-held insurance is separate from any policy you carry. Coinbase publicly discloses a $320 million crime insurance policy covering theft of assets they hold institutionally; this protects Coinbase's balance sheet, not your account directly. Gemini discloses comparable Aon-brokered coverage. Custodial insurance does not cover account takeovers caused by your own credential compromise. Read the fine print: most exchange "insurance" language describes the exchange's coverage of itself, not yours.

For individual holders, the practical insurance picture in 2026: Nexus Mutual for DeFi protocol exposure, Coincover via your wallet partner for everyday holdings, and Evertas if your self-custody balance crosses into seven figures and warrants an institutional conversation. Most holders carry no specific policy and rely on operational security as the primary defense. That is an honest stance; it is also one reason the inheritance and multisig sections of this module matter.

Estate Planning for Crypto

When crypto holders die without an estate plan, their assets are often permanently lost. The blockchain cannot distinguish between "holder deceased" and "holder who lost their keys." The coins remain in the wallet indefinitely, inaccessible to anyone.

The core problem

A traditional will becomes a public document after probate. If you list your seed phrase in your will, anyone who requests the probate record gets your seed phrase. The solution requires separating the legal document (the will) from the access credentials (the seed phrase), while ensuring the right people can find and use both.

The heir documentation packet

Even with the right legal structure, your heirs need an operations manual. Most non-technical heirs have never used a hardware wallet. They don't know what a seed phrase looks like, what a derivation path is, or how a multisig coordinator works. Build the packet while you're alive and keep it current.

• Asset inventory: every wallet, every chain, approximate balance, the device or service that controls it. Update annually with a dated revision note.
• Location guide: where each device is physically stored, where each backup lives, who has co-signing authority on multisig setups, what room and what container.
• Executor letter: written to a specific named person explaining what they are inheriting, what to do first, and which advisor to call (your attorney, your CPA who handles crypto, your hardware wallet vendor support contact).
• Recovery checklist: step-by-step for the most likely path. If you use a Trezor with SLIP-39, write out the exact reassembly procedure with screenshots from the current firmware version. Assume the heir has never seen the device.
• Tax basis records: the wallet-by-wallet cost basis records you keep under Rev. Proc. 2024-28 (covered in Module 5). Heirs need these to file accurately, and the IRS audits inherited crypto frequently.
• Glossary: a short plain-language glossary of seed phrase, private key, derivation path, multisig, hardware wallet, hot wallet. Two pages, not a textbook.

Store the packet in the same sealed location as your access credentials. Update it once a year, in the same review window you use for hardware verification. Date the version. Outdated instructions cause more inheritance failures than missing instructions.

Practical approaches

Dead-man scenarios and proof-of-life

A dead-man switch triggers when you stop checking in. The pattern: you confirm "still alive" through some action (a periodic transaction, a scheduled login, a check-in with a service). If the confirmation lapses for a defined period, your designated heirs receive access instructions or a counterparty releases a key.

Casa's inheritance protocol uses a service-mediated version: their team verifies the request through obituary documentation and identity checks before releasing recovery keys. Sarcophagus is a fully on-chain alternative built on Arweave, where encrypted instructions release automatically after a configured proof-of-life timeout signed against an Ethereum address. Each path has trade-offs: service-mediated approaches add a counterparty but reduce false-trigger risk and offer human review; fully on-chain approaches eliminate the counterparty but require flawless setup and tolerate no clock drift if you happen to be alive but unable to sign.

For most holders, the simpler answer is annual coordination with your attorney and your designated executor. You confirm in writing each year that you're alive, that the documentation packet location has not changed, and that your heir contacts are still correct. A signed letter to your attorney, dated, repeated every year. Quiet, manual, reliable, no on-chain dependency.

Long-Term Storage Strategies

For holdings you won't touch for months or years, the security requirements are different from active trading wallets.

Multisig setups

Multisig (multi-signature) requires multiple private keys to authorize a transaction. A 2-of-3 setup requires any 2 of 3 keys to sign. A 3-of-5 requires any 3 of 5. No single key compromise drains the wallet.

Setting up multisig at home: Sparrow Wallet is the open-source standard for self-custody multisig on Bitcoin. It coordinates signatures across multiple hardware wallets without requiring a third-party service. Specter Desktop is the primary alternative. Both are free, audited, and integrate with Trezor, Ledger, and Coldcard. Setup takes a few hours including verification on each device. The complexity is real but appropriate for high-value cold storage where the alternative is a single point of failure.

Singlesig versus multisig for heirs is a genuine trade-off. Singlesig with a strong SLIP-39 share distribution is simpler for a non-technical heir to reassemble. Multisig adds protection against any single key compromise but requires the heir to coordinate multiple parties and use a multisig coordinator tool such as Sparrow or Specter. If your heirs are technical or you can pair multisig with a service like Casa or Unchained, multisig wins. If your heirs are non-technical and self-recovery is the only path, a well-documented singlesig with SLIP-39 plus sealed instructions may serve them better than a multisig they cannot operate. Match the structure to the people who will actually inherit, not to your own technical preferences.

Annual verification

Cold storage is "set and forget" in one sense, but not in another. Hardware wallets can fail. Seed phrase backups stored in locations you don't visit can be moved, damaged, or forgotten. Once a year:

• Power on your hardware wallet and verify it still works, the PIN still works, and the device hasn't been tampered with.
• Verify your seed phrase backup is intact and in the location you recorded. Don't read it out loud; just confirm it exists and is readable.
• Send a small test transaction to confirm the wallet signs correctly.
• Review your multisig configuration if applicable - verify all co-signers and their keys are still accessible.
• Update your estate plan documentation if anything has changed (new accounts, new devices, changed storage locations).