Bitcoin Forum

I was curious to know if anyone would be interested in insurance for their bitcoins.  I'm in  just process of starting one here in the U.S.  I have the financial backing needed to pull this off just have to prove to investors that people actually would want it. 

Explain.

Interested. PM me when you are ready to discuss in more depth.

another noob post generating interest in peoples minds to then demand cash out of them later

unless the noob proves who he really is in real life, and proves his financial credentials. do not be fooled into giving an anonymous third party any money, simply based on a promise..

.. dont get goxxed

insurance would be paid by.....whom?

the users?
the exchanges?

how much, what rates.....if the risk of loss is to zero, and that risk is high....then insurance becomes impractical

I dont think you would have to prove to investors that someone would want insurance.

Your investors will want insurance.  Everyone wants insurance.   The entire mantra of the last 3 months has been "Boy I wish Bitcoin holdings had insurance".

-B-

Is this going to be like a bank that would store bitcoins?  Or like an AIG where you're selling insurance on a loss in value of BitCoins?

Ultimately it will be paid by the users. All business expenses are ultimately paid by their customers.

Just to clarify.  This would be an insurance policy against the loss of bitcoins?

What would the covered perils entail?

i.e. If a tornado knocks your house down and your usb gets lost would that get covered?

If its theft how do you prove in order to get paid back.  In a normal insurance claim of theft a police report would have to be filed in order to substantiate a claim otherwise you could call your insurer and state that your television and jewelry was stolen and they would send you a check ... obviously not a good business model for a company paying out ... and yes you could simply file a false police report however that is a barrier that most people 9/10 won't cross.

What would the policy limits look like?

In a currency such as usd or based on qty of btc?

i.e. $5,000 usd or 10btc

How many btc's would you have on any given day to support claims?

In the event of another Gox would you have at least 7500 btc or would you go bankrupt?


Sorry I could go on forever.

... just interested as I hold multiple US/state insurance licenses and know that if done properly it can be profitable however there are a lot of obstacles for something like this and unless you have been in the field for as long as I have some might be overlooked.

It would have to be paid by the users based on premiums paid and an initial bankroll of the company.

It would have to be a company like Allstate that has an escrow account for claims payable and paid directly to that. 

In the event that a third party is liable for the loss, i.e. gox then the company could subrogate against them for reimbursement

All fine in theory however as btc is an unregulated market its very difficult.

Also you would have to insure based on an agreed upon current market value.  If you insure at 500 but btc goes up to 1k and its stolen you would only get $500 worth of btc back.  On the flip if you insure at $500 and it goes down to $200 then you would only get $200.

FYI, insurance industry is highly regulated... it's going to be hard to get off the ground and cost a fortune.

AIG that worked out great another fine product of Deregulation.

i see this happening very easily:

i lost all my bitcoins, i had 1million of them. the thief moved them from 1yyyyyyyyyyyyyyyy to this address 1xxxxxxxxxxxxxxxxxxxxxxx
and now my 1yyyyyyyyyyyyyy is empty. lets make a claim

<receive 1million coins>

.. now to use the private key i have secretly stashed away for the 1xxxxxxxxxxxxxxxxxxxxx that i pretended not to own.

<3 claims later from random people>

insurance company have no more new insurance premiums's coming because the openly viewable insurance wallet is now empty. they can no longer guarantee payouts and everyone asks for a refund of their premium.

insurance company is now bankrupt

now tell me how will an insurance company prove or disprove a theft and that thief is not also the claimant

there is already one exchange in the UK where you can insure your funds. but one more would be nice ;-)

Then that's different.  Nothing stops someone from creating an OTC derivative contract say Mt gox credit default swap where if they default/failure to pay back users within x time frame it is triggered, and the price would be based on investors in that product's view on Mt gox credit risk.

only way 'insurance' here would work.  Hmm.  PM me then if someone is interested, i would see people trading this product based on all the chatter regarding being goxx'ed for example

This is what kind of has me confused.

There is no way a company would insure someone's bitcoins from theft and at the same time, allow them to be the one holding onto the coins.

This is exactly why they can't be insured

In addition to all the questions already asked, who will do the underwriting?  You?  Or do you have a team of people who understand Bitcoin enough to properly assess risk?

The way Elliptic  (https://www.elliptic.co/vault/faq)works, they store the coins for you. You don't have the private key, they do. That's sounds logical; insurance fraud aside, they can't know how secure your computer is against keyloggers etc. The reason they are willing to offer insurance is that they have confidence in their own storage. No-one can steal the coins, not even you.

I think that kind of insurance will become quite common. The vaults that offer insurance will probably offer other services, like making regular scheduled payments. They be much like an online bank.

think so too. and for mass adoption, we need this kind of service in my view.

anybody who

a) cares enough to want bitcoins
b) knowns enough to be able to acquire bitcoins
c) cares enough to want to secure those bitcoins

is going to

a) know how to learn things
b) make an m-of-n paper wallet
c) not give their coins to someone else

so this service will only resonate with

a) fools
b) sloths

We needs to know who you are in real life to make it more safe and more informations how on safe your insurance is?

Yes, they will offer other services.

Like undisclosed rehypothecation.

I think this will be difficult.  What happens when the insurance
company loses the coins or goes bankrupt?

In some US states, in some insurance markets, the other
insurance companies are required by law to insure
all the other insurance companies...so the consumer
is protected no matter what.  I don't think this
would be feasible in the bitcoin world.

Perhaps it could work if the insurance company
held some other kind of assets like real estate,
gold, that could be liquidated in a worst case
scenario.  I think that someone, sooner or
later, will adopt this model and it will become the norm
if bitcoin insurance is to be a reality.

Anybody who
D)WORKS FOR A CORPORATION

is going to

D)WANT TO SECURE THEIR CORPORATION's BITCOINS.

So this service will only resonate with a,b and
C) CORPORATIONS

Class dismissed.....

Elliptic vault is insured by an actually regulated institution that is accountable and can be taken to court if they steal your coins.

the OP is just an individual with no rep and no licencing to offer insurance.

would anyone in their right mind let him hold your coins under basically a vapour promise that if he steals your coins he will repay you using the insurance fee's he also asks from you to hold your coins.

take gox for instance. steals 740k coin and trying to buy people off with just 200k coin.. can you see where im getting at

the OP and elliptic vault are on 2 different scales and should not be confused.

i was more talking about insuring funds we can actually transact with, not hoard coins. because i and many people know that making a paper wallet and putting funds into that offline cold store paper wallet that has never touched a PC or a third party is a damned better proposal then giving it to third parties.

if giving it to third parties. you might aswell give it to a bank, and ignore what the whole benefit of what bitcoin is all about

Will I be interested in insurance for the currency which cannot be trusted? needless to say I will!

i too.. but i want the OP to explain, seeing as he is not regulated or experienced in being a "bank" and as he doesnt have the qualifications or rep to just insure storage of funds. how he will insure peoples transactions and the movement of funds p2p.

Regulated and accountable is not enough.  What's the point of taking a company to court if they are just going to declare bankruptcy? IMO, due to the nature of bitcoin, the insurance company must have other assets on the same order of magnitude as the coins they are holding that can be seized and liquidated in a worst case scenario.

part of being regulated and accountable is just as you said. having their own money set aside as backup, and not just using the premium fee's as the funds pot.

take exchanges, part of the licencing (becoming regulated) is to hand over a chunk of money to secure customers liabilities. thus by bing regulated you know there is a stash of THIER cash locked away in government control. to be used if the company runs off.

but i get the feeling that the OP doesnt want to be regulated, but wants to be more BS&T rather then elliptic vault. but thats besides the point.

if i had 1btc in MY wallet. and it was stolen. he needs to explain how id be insured firstly and how i can make a claim to get funds back or he can prove/disprove my funds were actually stolen, to ensure claims are done honorably.

for example. gox was not regulated. so how would OP's insurance protect me and reimburse me if i had gox funds going missing.. i know the answer, im just waiting for him to say it

I am not a big fan of government regulation in general.  In a perfect world, companies and the market would self regulate.  No intelligent consumer would buy bitcoin insurance from a vault that didn't have adequate reserves.

However, that might be idealistic. People are dumb, and bitcoin is not well understood yet.  So perhaps in the short term some sensible regulation would be pragmatic.

Almost 30 hours later and OP has not yet been back to explain what he is insuring against what, who is insuring it, and to provide proof of their backing.

It's not looking good, OP. You need to prepare your pitches way better than this.

At Xapo you can insure your bitcoin for .12% per year.  Can you beat those rates bud?

And who insures Xapo against subpoenas et cetera?

BTC at such places, are as safe as FIAT was at Swiss banks  ;) safe only from private thieves

For exchanges cold wallets it may be OK though.

Quite, I've yet to see any evidence that Xapo's insurers are insuring against loss of customer BTC through theft or incompetence on behalf of Xapo.

wtf would they be subpoena'd for? 

Is there some reason you don't consider the statements they make on their website to be evidence? From https://xapo.com/#aboutVault

In addition, the Vault is fully-insured, backed by Meridian Insurance. The insurance is provided at no charge to Vault users and covers all incidents that are not caused by you. For example, the insurance covers attacks by hackers, theft by a Xapo employee, a break-in at the physical vault location, and our bankruptcy. In this event, any bitcoins you lose will be replaced by Xapo. The only thing you’re not insured against are your own actions or error, for example, if you don’t follow basic security precautions (like picking “internet” for your password) or if you give you password to someone else who then steals your coins.

"Theft by a Xapo employee" is right there in the list.

Yes, I would need for Meridian Insurance to put out a statement that they are insuring Xapo against loss of bitcoins under those circumstances. I'd also want to know more about Meridian Insurance.

Unfortunately people lie, so we will never be able to have 100% trust. But that would go some small way.

Good idea...

I hope its true. 

A secure vault insured by a heavy-duty insurance company would be awesome!  Not sure how heavy-duty Meridian is, but sounds like we're on the right track with this kind of offerings.

Meridian is basically insuring the vaults inventory whatever that may be, i.e. bitcoins.  They will not specifically insure bitcoins as the price fluctuates so wildly.  Xapo most likely has a coverage limit of $1mm which includes the covered perils of theft.

The problem with this is if they have an average bitcoin vauled at $600 and the price doubles overnight and then their vault gets broken into their coverage limit might not cover all bitcoins at the new price of $1,200.  Everyone would have to take the $600 each and then file a lawsuit.

In order to cover this xapo would need to constantly be purchasing more insurance and passing the additional premiums on to the user, which they say is free.  Not possible unless they are losing money.

On the flip side insurance only covers market value so if you store at $600, the price drops to $30 and the vault gets robbed you only get $30.

Its clear that a legal team did not draft all of this so I am a little skeptical of their ability to pay out.

No charge to users?

Is this just typical "Buy X and we'll throw in Y for free!" BS, or is Xapo planning to make money off of the deposited coins somehow?

Xapo charge 0.12% per year for storage. Insurance is included for no extra charge. Their charges and policies are on their website.

why dont you just look at Xapo's backers.  You think Fortress is going to risk their reputation defrauding people out of small amounts of bitcoin?   

Sure, as long as they are legally covered I think they will do absolutely anything that makes them money.

I am surprised that on the same forum where people repeatedly say things like, "if you don't hold the secret keys for your bitcoins then they're not your bitcoins" other people are encouraging belief in statements made by a company that actually charge you for holding your bitcoins. It seems to me that such a company would demand a whole other level of rigor compared to even a traditional exchange.

Don't get me wrong, I wish them well and have no specific reason to believe they are crooks. I just would not be comfortable relying on that insurance ever paying out when it's needed. I think cryptocurrency is too new for insurance companies to get a handle on the risks, so find it hard to believe that any insurance company is truly doing that now.

If you have the financial backing, why would you need to prove it to anyone?   Please explain

yawn............. bored now

paper wallet is free insurance. anyone using an "insurance company" as a "bank" needs to realise to be an accredited insurer, the bitcoins will only be valued at the value  when signing the policy. meaning insure 1btc today, they would give you back 0.1btc if you lost your coins and the price was $5.6k next year.

secondly, if you withdraw your coins from their vaults. your funds are not insured anymore. so the only way to ensure your fnds is to leave them in THEIR control.

again they can steal 1btc and give you back 0.1 de to proce variance (even mark karpeles knows this.. steal 740k give back 200k)

so the only insurance you need is paper wallets.

the whole idea of bitcoin is to self manage, self protect and self control of your wealth. to not trust third partis that can take what they want and give you only a small percentage back, simply becuase that is what is wrote in their policy.

insurances and third parties storages are banks.. learn what bitcoin is about.

if a corporation cant make a paper wallet (cold store) then it needs to learn bitcoin better.
insurances and third parties storages are banks.. trying to fed off of noob's ignorance

Off the top of my head:

• So that more people believe you
• For the same reasons that some exchanges are having external audits done

If you have a look in the Service Discussion forum you will find several massive threads discussing failed and failing services that took people's money and bitcoins.

Many of these services put statements on their websites about how safe, secure and honest they were.

Purpose according to who though?

If any crypto currency is going to gain any significant following, it needs to be efficient and simple.  What you're suggesting is horribly inefficient and takes time to understand.

For mass adoption, there's definitely a downside to saying
to the average person/noob:  "Yeah, its a new kind of money... sorry, you can't put in a bank,
you have to manage your own security and protect it from hackers".

On the other hand, getting people to adopt a new mentality about taking responsibility
for their own money is perhaps easier than creating reliable trusted vault companies.

..overall, its another facet of bitcoin that will be interesting to see how it unfold

1) getting an insurance policy, transferring funds, knowing the policy ends when you withdraw and needing a new policy for the new amount you want to keep secured (change address)... yea so much faster then making a paper wallet.

2) again insurance and banks are for ignorant noobs

Paper wallet vs. credit cards...

You can call them noobs.  Most will call them rational.

If BTC is going to go mainstream, a BTC bank would be the best way to go about it.

The ideas that this thread is spurring in my head are very intriguing to me. On the one hand, altnoob who has worked in the insurance industry for a while raised a lot of good questions. I think you definitely need to take that into mind OP unless you have informed advisers or at the very least a good lawyer.

On the other hand though, I really don't know how I feel about the idea of people putting their BTC into an insurance companies "vault" (aka a bank). It does kind of seem to go against some of the main principles Bitcoin was founded on in the first place. And like a few people have said- Why would I PAY to put my money into someone else's vault when I could put my own money into an offline paper wallet "vault" for free? That is also a good point. It Would be good for beginners and like someone said- corporations. But to get a large share of bitcoin holders to put their money into an unknown company, I think you would definitely need to offer some sort of perks; interest, ability to hold bitcoin And some Fiat money in the same vault? I don't know...

After the scandalous fall of Mt. Gox and the Bitcoin communities trust being damaged, it could go 2 different ways. 1)- More bitcoin holders get scared/skiddish and sell-off, going back to their "trusted and safe" Fiat money and causing the price of bitcoin to drop. OR 2)- The majority of bitcoin holders know that the future of BTC is very promising and plan on keeping/buying more coins, but now are even more weary of trusting any third parties. Instead of letting it ruin us, we rise up as a whole community and decide to fully support all trustworthy businesses and slowly shut out all the scammers. If Bitcoin truly is the future of this world as many of you have said, there will be even more large corporations and venture capitalists joining the ranks. At that point I could see a few big name insurance companies blossoming (By that point Allstate, State Farm, etc. probably... ::))

Maybe this is the reason more big money hasn't jumped in yet.  Corporations haven't figured out how to store their coins.

Agreed ^. I think there is this vast perception in the mainstream media and uninformed public that Bitcoin is for drug smuggling hitmen and there is a Very High danger of hacking and theft present. As you know, this is not accurate at all and only an attempted smear of Bitcoin's reputation and trustworthiness. Most of this smear campaign with sensational anti-BTC headlines is probably intentional unfortunately, probably due to Big Bank and Gov. financial backing. All we can do is either A) Not give a fuck about what the sheeple masses think of us, or B) keep pushing on and prove to the public that BTC is filled with many good people. More stuff like Sean's Outpost and like Doge did- funding a team, in this case the Jamaican bobsled team.  8) Cooool Runnings, mon.

its kind of good that credit cards got injected into the conversation

credit cards allow people to spend money and protect that spending, and will reimburse people after its been spent.

as i said before apart from only insuring stored coins (a vault/bank concept) how would the OP insure people that actually want to spend/transact their coins with third parties.(a credit card concept)

so smart you are