The short version: the thirty seconds you spend labelling a transaction today is worth hours in three years, when you're reconstructing a tax position, explaining a payment to a bank, or trying to remember whether that address was yours. Nobody does it. Everybody eventually needs it.
I can tell the colony cats apart. Seven of them, and I know which is which, who tolerates whom, who shows up when.
I could not write this down in a way that would be useful to anyone else. I've tried. What comes out is "the orange one" and "the smaller dark one", and the neighbour who fed them for two weeks in August had no idea who she was looking at and told me afterwards that she thought there were four.
The knowledge is real and it lives entirely in one head, which is the same thing as saying it doesn't exist. That's where most people's bitcoin records are.
1. What you'll be asked, eventually
Not hypothetically. These are the four moments that arrive:
Tax. Most jurisdictions want the acquisition date, the amount, the cost in local currency at the time, and the same for disposals. Reconstructing three years of this from exchange CSVs and a block explorer is a genuinely terrible weekend, and the exchange that had half your history may not exist any more.
A bank asking about the source of funds. You sell, the money lands, and the bank wants to know where it came from. "I bought it years ago" is not an answer; a dated record is. This is routine, not suspicion, and people are regularly stuck because they can't evidence something that actually happened.
Your own confusion. Six months on, you'll look at a wallet and find an outgoing transaction you can't place. Was that a purchase? A transfer to your own cold storage? Paying someone back? Without a note, there is no way to recover this — the chain shows an address, not an intention.
Someone else, without you. The inheritance case. A list of wallets with no labels is a puzzle handed to a grieving person who doesn't know the vocabulary.
2. What to actually record
Keep it small enough that you'll do it. The minimum that works:
Label every transaction when you make it. One line: what it was and why. Most desktop wallets have a label field on transactions and addresses; it exists precisely for this and almost nobody fills it in.
Record the local-currency value at the time. This is the field people skip and regret hardest. Your tax authority almost certainly wants gains computed in your own currency at the rate on the day. Capturing it takes five seconds at the time and is a research project later.
Name your own addresses. Mark which addresses and wallets are yours, so a transfer between your own wallets never looks like a disposal. Misclassifying internal transfers as sales is the single most common error in reconstructed crypto tax records, and it always errs against you.
Keep the exchange statements as they happen. Download the CSV each year while the account still exists. Exchanges close, delete histories, and change export formats. The record you can't retrieve is worth nothing.
Note the wallet, not just the transaction. Which device, which seed, which derivation path. In five years "the Ledger" won't be specific enough.
3. Where to keep it
A plain spreadsheet beats specialist software, for one reason: it will still open in 2040. Date, amount in BTC, amount in local currency, type, wallet, note. Six columns. That's it.
Keep it with your other documents, not with your seed. It's not secret in the way a key is — but it is a map of your holdings, so it isn't public either. Treat it like you'd treat a bank statement, because that's exactly what it is.
Make it readable by someone who isn't you. The test: could your partner, or an accountant who has never touched bitcoin, follow this? If the answer needs you present to explain it, you've written the "the orange one" version.
And attach it to the inheritance letter. If you wrote one of those after my earlier piece, this is its missing appendix.
4. Doing it retroactively
If you're three years in with nothing, don't try to fix it all at once.
Start recording from today — that's the part that compounds. Then, when you have an hour, work backwards through the largest transactions only. Twenty percent of your entries will account for most of what anyone ever asks about. Perfect history is not the goal; adequate history is, and adequate is reachable in an afternoon.
For what's genuinely lost: write down what you do know, including that it's approximate. A dated note saying "bought roughly this much, around this time, on an exchange that has since closed" is far better evidence than nothing, and it's honest about its own uncertainty.
5. The uncomfortable half
This is also a surveillance file you're building on yourself. A complete, labelled ledger linking your identity to your addresses and amounts is precisely the document you'd least like stolen, subpoenaed in a dispute, or found during a burglary. There's real tension between the privacy advice I've given and the record-keeping advice here, and I won't pretend there isn't. The resolution I'd argue for: keep records appropriate to obligations you actually have, store them like financial documents rather than like secrets, and don't build a more detailed map than your situation requires.
Record-keeping software wants to be a subscription. The portfolio trackers and tax tools that solve this are mostly good products with an awkward property: you hand them read access to your entire financial position, in exchange for convenience, forever. Some have leaked. A spreadsheet has no business model and no breach.
And it will not feel worth it, for years. The payoff is invisible right up until the day it's enormous, which is the structure of every piece of maintenance advice ever given and the reason none of it gets followed. I can't make the first three years feel useful. I can only report that everyone who did it is calm during the week that everyone who didn't is not.
Seven cats, and the only reason I know them is that I'm there every day. Knowledge that lives in one head isn't a record — it's a single point of failure with opinions. 🐾⚡
