Why Dry-Runs Matter

Backups are only useful if they actually restore funds. Real-world failures include typos in written seeds, degraded metal plates, incorrect passphrases, forgotten passphrase variants, hardware incompatibilities, and human error. Dry-runs surface these problems in a controlled setting so you can fix them before they become an irreversible loss.

Outcomes you should expect from a dry-run

• Confirm your seed or key material is complete and legible.
• Verify the passphrase or 25th word if you use one.
• Ensure your chosen hardware/software can restore the wallet and spend a transaction.
• Validate multisig workflows and cosigner availability.
• Document timelines, locations, and people who can help in an emergency.

Plan Your Dry-Run: Scope, Tools, and Safety

A successful dry-run begins with a careful plan. Decide what you will test, the devices and software you will use, and the environment. Prioritize safety and minimize exposure of secret material.

Scope checklist

• Type of backup to test: BIP39 seed phrase, SLIP-39/Shamir, metal backup, hardware seed, or watch-only descriptor.
• Restore target: Same model wallet, different model, software wallet, or air-gapped signer.
• Testnet versus mainnet: Always use testnet for practice restore where possible to avoid costs and accidental broadcasting.
• Transaction workflow: Create and sign a PSBT or signed transaction and broadcast it when ready.
• Multisig: Verify cosigners and communication channels for signing (USB, QR, PSBT files, or PSBT air-gapped workflows).

Tools and environment

• Hardware wallet(s) you trust and a separate test device (old laptop or spare phone, ideally air-gapped when testing seeds).
• Software wallets that support PSBT, testnet, and descriptor formats (install on isolated device or virtual machine).
• Paper, metal backup tools, and magnifiers to inspect engraved backup plates.
• Secure storage such as a bank safe deposit box in Canada or a personal fireproof safe to test physical retrieval processes.

Step-by-Step Dry-Run Guide

1. Start with a small-value test wallet

Create a new wallet on a test device and transfer a small amount of Bitcoin or use testnet coins. If you are in Canada and prefer mainnet testing, keep the test value minimal to limit exposure. Some Canadian exchanges and peer-to-peer platforms allow small transfers that are useful for these checks. Fund the wallet and make note of the addresses and UTXOs used for the test.

2. Perform an offline seed restore

Using only the backup material, restore the wallet on a fresh device or a factory-reset hardware wallet. If you use a passphrase, try variants you might realistically have used. Ensure the restored wallet shows the test UTXO and can create a spending transaction.

3. Sign, broadcast, and confirm

Create a transaction that sends the test funds to a new address you control. If possible, sign offline and broadcast from a separate, networked device. Confirm the transaction appears on-chain. This validates both the seed and the spending workflow.

4. Multisig and PSBT drills

For multisig setups, practice a full recovery where cosigners that are stored in different locations are used to reconstruct the wallet. Create and circulate a PSBT, have other cosigners sign in sequence, and broadcast the final signed transaction. Test alternative cosigner combinations if your setup supports key redundancy.

5. Test partial restorations and delegated recovery

If your plan involves a trusted third party or professional service for emergency recovery, test that workflow without exposing secrets. Use mock documentation and secure communications to validate identification, verification steps, and legal authorizations if applicable.

Specific Canadian Considerations

Canadians can take advantage of local institutions for secure storage and verification steps, while being mindful of privacy and regulatory context.

Safe deposit boxes and physical backups

Banks and private vault providers in Canada offer secure storage for metal seed backups. Use these for long-term storage, but also test the retrieval process: make a dry-run where you retrieve the item, inspect it, and return it following your documented procedure. Note any identification required and how many business days it takes to access the box.

Interac e-transfer and small-value testing

When funding test transactions via Canadian bank rails, use small sums and be aware of limits and delays. Avoid revealing seed material or passphrases during any banking interactions, and prefer using exchanges that support small test withdrawals to your own wallet. Never rely on an Interac message to transmit seed material.

Regulatory and fiduciary notes

While this guide covers operational tests, tax and regulatory obligations remain. If you hold Bitcoin on behalf of others or run a business, check FINTRAC guidance and consult professional advisors to ensure your custody and reporting practices meet Canadian law. This post is educational and not legal advice.

Common Pitfalls and How to Avoid Them

• Forgotten passphrases - Keep a secure, encrypted copy of hints and the exact passphrase format in a separate trusted location. During a dry-run, confirm the passphrase spelling, capitalization, and any leading or trailing spaces.
• Bad backups - Metal engravings can have missing characters; paper can fade. Inspect backups closely and perform a restoration test after any long-term storage period.
• Hardware incompatibility - Multiple wallet vendors implement BIP39 and other standards differently. Test recovery on the devices you might realistically use in an emergency.
• Documentation gaps - Record step-by-step recovery procedures, including device models, firmware versions, and who to contact. Test that a trusted but non-technical person can follow the checklist to initiate a recovery under supervised conditions.
• Single point of failure - Don’t rely on one person or one location. Use multisig, distributed backups, or professional escrow services as part of your plan and test each recovery path.

How Often to Test

Schedule regular tests and post-change tests. Good cadence examples:

• Annual full restore: Restore from each backup type at least once per year.
• After major changes: Test when you change hardware wallet models, migrate seeds, or modify multisig participants.
• After long storage: If a metal plate or paper backup has been idle for years, perform a verification check.

Documenting and Automating the Process

A repeatable record makes recovery faster and reduces stress during emergencies. Keep a recovery manual that includes:

• Wallet types and descriptor information, including derivation paths and address format (bech32, p2sh, etc.).
• Exact hardware and firmware versions used during the last successful test.
• Step-by-step restore checklist and a list of authorized cosigners or agents.
• Contact plan: who to call, where backups are stored, and how to access bank safe deposit boxes or private vaults in Canada.

Automate reminders for annual tests using calendar alerts and record each test with dates, outcomes, and corrective actions taken.

A Practical Example: A Canadian Multisig Dry-Run

Scenario: A 2-of-3 multisig with keys stored in three provinces. Steps:

1. Create a new 2-of-3 multisig on testnet and fund it with small coins.
2. Have each cosigner verify their key material matches the multisig descriptor.
3. Simulate loss by attempting a restore using two cosigners located in different provinces. Create a PSBT on an air-gapped device, sign with cosigner A, transfer via QR or SD to cosigner B, sign again, and broadcast.
4. Document any failures: missing keys, incompatible firmware, or communication bottlenecks, and update the recovery manual accordingly.
5. Return the cosigners to their secure storage and note access times and retrieval costs for future planning.

Final Checklist Before You Start

• Use testnet when possible to prevent accidental fund loss.
• Create a written plan and recovery manual before touching seeds.
• Perform dry-runs with small amounts first, then scale to full restores.
• Include multisig cosigner drills and legal or delegated recovery simulations if applicable.
• Record firmware versions, device serials, and exact passphrase formatting.