Bitcoin Forum

http://bitcoin-insurance.com/files/forumheader.jpg (http://bitcoin-insurance.com/)

We are happy to announce the official start of Bitcoin-Insurance.com. In the last couple of days / weeks we went through alot of drama here with Pirate defaulting and also this disaster with Matthew, destroying ALOT of trust in bitcoins and the whole community.

So whats Bitcoin-Insurance?
Its a platform where users can buy / sell and trade insurance policies

Aim:
1) Split the risk for investors of high risk securites (like pirate or Obsi)
2) Offer good investment possibilities for others with parts of their capital insured.

Idea:
A user A believes that P will default, a user B (perhaps P himself) doesnt think that.
In this case B would sell insurance policies and A would buy insurance policy.
Each policy is valid for 1 cycle (3 months ) and sold the week before the cycle starts.
A policy can only be sold if there are users on both sides (A and B).
Policies represent a value of 1 BTC each.
Bitcoin Insurance will work with the BTC in low risk investments to generate some extra interest (perhaps 4, perhaps 7.5% per month we dont know yet)
After the cycle started, you can trade (no fix price) policies in case there are A and B users wanting to trade.

1 week after the end of the cycle the winners get all the invested capital.
The extra interest is payed at the end to the loser of this insurance.

==========
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Where is the profit for Bitcoin Insurance?
We will keep a small percentage of the extra interest generated by the invested capital
We will keep a small trading fee for "trading" policys during the cycle.

Updates:

• 14th Sept 2012 Official release: The last couple of days we worked hard on the security script, making it now close to impossible to get any fraudulent payments from the system.
• 22nd Jan 2013 Sell in progress: Due the lack of trust and all the timewaste that comes with replying to all those comments here, we decided to sell this project. The domain has already been transfered to Andrew Bitcoiner (https://bitcointalk.org/index.php?action=profile;u=39244) and the rest of the script will soon be delivered. From this time on Im not in charge and therfor NOT liable for any problems / missmanagement ...

reserved

The math Example: A user A wants 100% of his capital insured

A invests 100 BTC in Bitcoin Insurance, buying insurance policies and 100 BTC in P bonds paying 7% weekly (like Pirate did, or Obsi still does)
B invests 100 BTC in Bitcoin Insurance selling insurance policies

In case P defaults:
A will get 100BTC + 100BTC from BI, lost 100 BTC to P. total 200 BTC investment riskfree with 0 BTC interest
B will lose 100 - 45 BTC with BI

In case P does not default
A will lose 100 - 45 BTC with BI, but get 100 + 125 back from P. total 200 BTC investment riskfree with 70 BTC interest
B will win 100 + 100 BTC with BI, total 100 BTC investment with 100 BTC interest


Where is the win?
A can make 35% interest in 3 months with 100% of his capital covered.
B can make 100% interest in 3 months with 45% covered in case of a default 

INSUR  ANCE 

@kakobrekla the picture is now clickable

@Usagi thanks for pointing this out, but i think that insurance still fits here, especially considering that people are not really familiar with the term "credit default swap (CDS)". So using this term would make it harder for people to understand what we offer. :)

@Deprived I think you didnt understand the system completly. Those 45 BTC you think that BI will lose, come from the "extra interest" generated, by working with the money. Its no fix amount yet, as we dont know which rates we get ourself from save investments and therfor not what we can pay to the loser. Those 45 BTC represent the interest for 1 cycle (3 months) for 200 BTC which calculates to 7.5% monthly (0,075 * 200 * 3 = 45)

Yeah, misread it - the 22.5% I calculated is for 3 months not 1 week.  So your (BI's) profits in that example are whatever profit you can generate over about 7% per month (allowing for compounding) on funds available to you.

The problem then becomes making that 7% - essentially the vast majority of shares/bonds on here are either:

1.  Mining bonds/shares - good luck making 7% a month on those.
2.  Companies investing in shares - most of these invest in 1., meaning you pay them a fee.  Try finding some of these who have made ANY real profit over any significant period.
3.  The high-risk stuff that people want to insure.
4.  Comapnies with an undisclosed business plan (typically making unsecured loans that then get defaulted on or investing in type 3. shares and defaulting when the investment gos South).  The track record of these is far from good.

There's just not much else around to invest in - and pretty much nothing that you can safely rely on to make retuirns of over 7% per month.  There's some ASIC-based shares (mining or development) which may be good bets - but they all have risks of a serious downside, which you can't afford to take.

Try to list even half a dozen shares that will pretty reliably give you 7%+ per month AND have the liquidity you need.

Now look at it from an investor's point of view.  If these reliable investment vehicles are available to you paying out 7%+ per month then they're also available to us.  So for an investment in you to be worthwhile, you need to have potential to be paying US out more than that 7%+ per month (not initially, obviously, but longer-term).  SO we'd want to see figures from you showing what volume you needed (based on the capital requested) to deliver good returns.

I believe usagi is likely correct that there's no real market for it.  There's plenty of market of people who would want to "insure" against default - but those with the confidence to take the other side of the bet will just invest directly. 

The only real exception to that would be the actual issuer of P IF it was just a simple scam/ponzi - then they could reduce their payouts by "insuring" them right up until before they pulled the plug on it.  Maybe that's where your market is.

Nice idea.

Now down to business... who holds the coins in the insurance fund?  Where *exactly* will they be invested?

And most importantly, dox please. 

No one gets coins without dox anymore.

@Deprived I think you didnt understand the system completly. Those 45 BTC you think that BI will lose, come from the "extra interest" generated, by working with the money. Its no fix amount yet, as we dont know which rates we get ourself from save investments and therfor not what we can pay to the loser. Those 45 BTC represent the interest for 1 cycle (3 months) for 200 BTC which calculates to 7.5% monthly (0,075 * 200 * 3 = 45)
[/quote]

So you want to take the money you collect from people to insure risky investments and gamble it right?

Edit: I'm not taking the piss, I think you could have a viable business model as long as you've got enough investors coming in and buying insurance from a variety of different ponzi schemes.

When one ponzi goes tits up you could pay them out with money raised from insurers of other schemes that have yet to fail which would gain you credibility and in turn get you more insurance sales from other stupid people.

The names not very catchy though I've checked godaddy and ponzisure.com is available.

The capital payed by A and B will be put in various assets, therfor splitting the risk of a default. Feel free to advice me, which assets you consider "save", but in the end I will decide. I had so far Patrick in mind, same as mybitcointrade. I will also make it public, in which assets your funds are put in together with the amounts / percentages. In addition as I stated in my initial post "(perhaps 4, perhaps 7.5% per month we dont know yet)", so dont ride on those 7.5% like its the only thing you understood.

If you would please read the math examples. Telling that there is no advantage for B is just a lie or you didnt understand the scheme. Just read the two lines under "Where is the win?" and if you still think the same, read it again...

@exahash: I wont provide any "dox", you may check my reputation in this forum. I sold over $7000 in amazon GCs for BTCs, in addition bought BTCs with paypal and paxum for more than $8000. Not a single problem. I will make it public, where the funds are put in, like stated above. You may ask those people directly, if they really hold those funds or not :)

I think it's absolutely ridiculous and I hope people stop handing their money over to ponzi schemes and you don't get any sales.

Where do you live, and how old are you?  The numerous spelling/grammatical errors in your OP scream "unprofessional" to me.

I live in Germany, so Im no native speaker. Shoot me a pm with the spelling misstakes and ill fix those.

Government ID please.

We wouldn't want this to be another scam right?  :o

To make it easier for you:

https://bitcointalk.org/index.php?topic=96578.0
https://bitcointalk.org/index.php?topic=62361.0
https://bitcointalk.org/index.php?topic=76007.0
https://bitcointalk.org/index.php?topic=97764.0

I created an account. But can't login.. even after resetting my password...  ???

We are working on this, try in 10 min to reset your password.

Edit: should work now, just request your password.

I hope that this will be the last bug, but Im sure it wont. Keep reporting and we will try to fix all problems immediately.

very interesting. whether there will a exchange website where people can trade their CDS position?

I will be issuing a high yield pass-through bond soon, and I will be pleased to do some CDS trading myself against the security I issued myself. Is there anyway to ask you prove that I have hold a certain position to the public?

Though there is still risk for investing my bond, but I have strong belief in the plan myself. People will have a wrong estimation about the default probability distribution function, and I will make money out of it as I'm the one who knows the distribution the best at the same time deliver a clear signal to the market to protect my investors from panic.

You people can't be serious, how did any of you make money in the first place?

The trade feature is already built in. The only insurance we have right now (for testing) is OBSI. This insurance is right now in "released" mode. that means that new policies can be sold. In a week, this insurance will "start" and then those released insurances can be traded, but no new insurances are released.


Thats one of our next features. Our system will generate graphics which webmasters can post on their websites, showing the Insurance and the amount of policies that have been sold by the user

I just want to get this straight from the angle of someone who will buy insurance.

In this case, there is no default.

• I buy 10BTC worth of insurance. This insurance is for 12 weeks.
• Then I buy 10BTC of OBSI.HRPT on the GLBSE.
• I make 7% per week on OBSI.HRPT
• After 12 weeks, I still have 10 BTC of OBSI.HRPT
• I loose the 10BTC I paid for insurance.

In this case there is a default

• I buy 10BTC worth of insurance. This insurance is for 12 weeks.
• Then I buy 10BTC of OBSI.HRPT on the GLBSE.
• I make 7% per week on OBSI.HRPT, until it defaults, on the 8th week
• I get 20BTC paid from Insurance

Is this how it works?

Yes, plus you get something back in case of no default (the interest made with those 20 btc).
The insurance is only "valid" from the "start" of the cycle till the "end", so if an insurance ends Sept 30, and the first missed payment leading to a default is Oct 1st, then you would still get your 20 BTC from the insurance.

Can you stop confusing pole by calling this insurance?

Let me use big friendly pink letters:


THIS IS  CREDIT DEFAULT SWAP (CDS)

What is this CDS thingy? Lets find out and search:

A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a loan default or other credit event. The buyer of the CDS makes a series of payments (the CDS "fee" or "spread") to the seller and, in exchange, receives a payoff if the loan defaults.

In the event of default the buyer of the CDS receives compensation (usually the face value of the loan), and the seller of the CDS takes possession of the defaulted loan.

Now, here is something interesting to you all:

However, anyone can purchase a CDS, even buyers who do not hold the loan instrument and who have no direct insurable interest in the loan (these are called "naked" CDSs).

What happens, when there are more CDS contracts outstanding than bonds in existence?

Please feel free to read on: http://bit.ly/Qh0y0m

Lets wait another 5 posts to see the same comment from another person :)

So far only1 person loaded the acc with money and withdraw it some hours later. I see that the offer of only 1 insurance is a bit small, maybe we could add 1 or 2 more. Which insurances would be interesting for you to buy / sell ?

Think part of the problem is what your existing contract is covering.

Here's what it says:

"Event: In case Obsi or the company/individual he invested in doesn't pay back the invested capital this insurance will pay out. Smaller delays of the interest payments, decreases in interest payments and the fate of an individual are excluded from this deal, same as any problem with third partys. The date of the default, is the date of the first missed payment."

The problem is that Obsi' share isn't a bond - and neither he nor the company/individual (if they exist) he invests in have undertaken to ever repay the invested capital.

The most likely scenario for it going wrong is that it's a ponzi all along.  In that case Obsi would be unlikely to say "I'm keeping all your money".  Rather he'd claim that whoever he was passing through to had suffered heavy losses and that dividends would be at zero for a while.  That way he could continue to get more funds in through his other companies (none of them allow share/bondholders to ever withdraw funds) - without being labelled a scammer. (That's IF it's a ponzi).

Your contract doesn't protect against this - yet the above is exactly the scenario I (and I'm sure many others) would want protection against (or more accurately, in my case, to bet on it happening - I wouldn't actually be investing in the HRPT).

IF it's a ponzi/scam then short of him essentially saying "I'm a scammer" there's basically no way to win - and IF he's a scammer then admitting it would reduce the amount he could run with so wouldn't happen.  Your contarct would have worked for pirate - where withdrawlas of pincipal were offered.  It doesn't where there's no way provided for you to ever get your capital back anyway - and hence failure to return capital is something you've essentially agreed to anyway.

Deprived pretty much has it. Not only is this in no way insurance, but it is in no way useful at this point. Back to the drawing board.

@Deprived: I see your point and you are right. So would changing the terms that an "interest rate of less than 4% on average for 30 days would count as a default" help? So far no policies have been sold, so changing the terms is still possible. I know that its quite low compared to the 1% daily hes offering now, but I also have to attract "sellers" of such policies.

You'd then have to revisit your time-scales.

What would defaulting on day 10 of a contract mean - would it:

a) mean that the 30 days was the 30 days ending on day 10 of the contract period?  If so then noone would take out contracts unless the previous 20 days were favourable to their desired outcome.
b) mean that the 30 days was the 30 days commencing on day 10 of the contract period?  If so then the outcome of the contract could potentially not even be know, let  alone settled, until 30 days after the contract had ended.
c) something else?

I frankly dont believe the obsi securities are a good target for what you're trying to offer - as they don't have any clear point at which a default would become apparent (other than him saying he had defaulted or vanishing).  Betting on how much interest he'll pay would be hazardous - as he can set that at will and not disclose any verifable information to justify the decision.  That would allow him (or proxies) to bet on the side of the contarcts which he knew in advance was going to win - the prospect of which is sufficient in itself to totally deter me from gambling on that.

The key date would be the day where the average drops below 4% for 30 days. For example Obsi is paying out 1% daily for 100 days, then suddenly let the interest drop to 0%. After 26 days of 0 interest, the average droped to 4%, so the key date would be day 126. You also have to keep in mind that you can only buy insurances when someone else is selling them. So its not like you can just jump in a seconds before its too late and grap hundreds of insurances.

But as I already asked above, which asset would you like to have insured? dank? RustyRyan?

hm... was hoping for more feedback.

Are you willing to provide a legal adress under which someone could be held accountable in case of fraud?

I did not find anything on the Website.

If your answer is No , 1. Why not ? 2. You shouldnt be trusted with anyone's money.

I already answered all your questions. Im also on IRC to chat directly with everybody who wants to talk. Eisenhower34 @ freenodes #btcst
If my answers didnt satisfy you, then i demand that you dont use BI.

That is a really crappy way to answer a legitimate question.

I agree you should not call this insurance, it is misleading. Call it what it is, a CDS, most people have some idea what that is from all the bad press they have been getting from the financial crisis.

The math in the OP seems kinda wonky. When you are calculating a "return on initial capital" You should also include whatever gets put into this scheme, so the actual returns are lower.

It seems to me it would be better to just stick a few bitcoin in a cold storage than to trust you.

WTF... You are aware that I already answered this question alone in this thread twice before he asked it again. Someone who actually cannot read or do not want to read does not deserve a proper answer.

This is the last time I will ever respond to this question:


If thats not enough for you, then i recommend NOT TO PUT ANY MONEY INTO BI.

I mean, where are we. Every little fish with 10 BTC asking for my documents. I have a pretty good reputation in this forum. The Insurances will always have a maximum limit for the amount of insurances. I will only release the amount I can cover with my personal funds in case anything "bad" happens. I hold right now alone in GLBSE the value of 1500 BTC, bitcoinmax 500 BTC, mybitcointrade 300 BTC and lend to third persons another 150BTC and will soon lend another $1000 denominated to "Projects".

Its planned to take some of the BTC coming from the extra interest in such a "cold wallet" to cover bigger amounts in the long term. As long as this project doesnt take too much time, i wont take any BTC for myself.

I say it again, if you think that your funds are unsave DONT PUT ANY MONEY INTO BI

Why wont you give any Dox Information?

Whats wrong with that? Why does nobody do business like a real world business man with real information? Is the date for closing down the site already fixed?

Bitcoins are not toy money. They are real. Your forum reputation does not account for anything , when you still can vanish back into anonymity.

Yeah, giving out more Information about yourself may even increase your sales , because of trusting customers.

If we want to get Bitcoins widespread into the real world , we have to stop with bullshit like hiding who you are as a Business Operator.

Also if your webserver is in germany ,as your nationality suggests , it is required to have an imprint.

Your aggressive attitude towards this is not helpful in your cause.

So your move.

+1.

If I ever create a business where I am handling other people's Bitcoins, I'll definitely release a good deal of personal information.  I'll never conduct business with a "company" who refuses to even tell me the address where they are based.

See GIPPT as an example for why this kind of "insurance" is a bad idea: https://bitcointalk.org/index.php?topic=96793.200 (https://bitcointalk.org/index.php?topic=96793.200)




Definitely not.  Usagi runs CPA (http://www.tsukino.ca/cpa/), which provides the kind of insurance that a mining company might look for.

I wont provide any informations nor an "impressum" (thats the imprint you were talking about) because the German jurisdiction is insane, for example a user puts a video of youtube on your site and you get sued because the music in the video in copyright protected. I think in the long run, Germany will forbid Bitcoins and everything related to Bitcoins, thats as sure as death and taxes. So Im taking any security layer in can get.


Thank you! like i said, if you dont trust me then DONT PUT ANY MONEY INTO BI


I dont know what Bond / share thing you are running, but in case your costumers hold back, because they are afraid to lose their money with you, an insurance offer could help. CPA might be the better option for you, BI isnt really established at this time and combining "non established" projects together isnt a really booster for none of both :)

Whats GIPPT? I think that my system is totally different compared to his. So why dont read my initial post before you say that this kind of insurance is a bad idea. As far as I understood Ineedausername gave the money to hashking and imsaguy, and hashking "defaulted". I dont think that to give 50% to one guy is a good idea. I was thinking about 20 assets, each getting ~5% of the pie. Maybe everything is working out for them, according to pirates talk today on #btcst, giving us the first real inforamtions. Further ill keep things low on start, not risking anything I cannot pay back with personal funds. I also talked to usagi, if I may be interested in a CPA contract, adding some additional security.

GIPPT (Gamma Insured Pirate Pass Through) is a GLBSE asset that offered 2.5% weekly interest on "insured" deposits with pirate.  The insurance funds were invested with two other forum members.  A portion of the insurance money made its way back to pirate, so the fund has not yet been able to pay out the full  insurance yet.  The entire fund was questionable from the start because there is no reason to pay 2.5% on a fully insured investment unless the insurance money was earning >2.5%.  Anything earning 2.5% is going to carry some risk.

Your "insurance" is similar in that it is insuring high risk investments with money in "low" risk investments.  The problem is that these investments are often not as low risk as people believe.

No, not for BAKEWELL.

This is a credit default swap. If you don't know what these are then stay away.
This is for people who like to play fast and loose. Both sides of the "insurance" represent high risk and high rewards.
If you are an "average" investor, you might be better off just playing SatoshiDICE.

In that case you are of course aware that providing no contact information/full "Impressum" for your "business" is illegal under German legislation. Your website is a perfect opportunity for an Abmahnanwalt to sue the fuck out of you.

EDIT: Oooh, I see that you do know:


Yeah, that must be it. Insanity.  ::)

I checked that, he is not hosting in germany. so it may not apply, and since he decided to stay completely anonymous the "Abmahnanwalt" would have a hard time and no easy money.
But since he is offering a high risk venture with "online-reputation" based on some sales, he will probably decide to vanish some time. They all denied it, they all did get away with someones bitcoins...  ::)

"online-reputation based on some sales" .... i loled ... $14k+ with 50+ people are "some sales"

I dont see this is going anywhere. Everything has already been said, and if someone wants to constribute, he may contact me directly.

If someone want to buy the website (as it is), hit me up. Asking price 200 BTC. My time is too valuable to answer those little kids like "phantastisch" his stupid scammer comments.