Bitcoin Forum

A Bitcoin storage service that is insured against the loss and theft of the digital currency has launched in London.

Elliptic Vault uses "deep cold storage", where private encrypted keys to bitcoins are stored on offline servers and in a secure location.

The facility's founders say they are the "first in the world" to offer insurance for Bitcoin owners.

Stolen bitcoins cannot be recovered as all transactions are irreversible.

Online wallets used to store bitcoins have been subject to a number of cyber-attacks and some users have also suffered from accidental loss.
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How Bitcoin works

Bitcoin is often referred to as a new kind of currency.

But it may be best to think of its units being virtual tokens rather than physical coins or notes.

However, like all currencies its value is determined by how much people are willing to exchange it for.

To process Bitcoin transactions, a procedure called "mining" must take place, which involves a computer solving a difficult mathematical problem with a 64-digit solution.

For each problem solved, one block of bitcoins is processed. In addition the miner is rewarded with new bitcoins.

This provides an incentive for people to provide computer processing power to solve the problems.

To compensate for the growing power of computer chips, the difficulty of the puzzles is adjusted to ensure a steady stream of about 3,600 new bitcoins a day.

There are currently about 11 million bitcoins in existence.

To receive a bitcoin a user must have a Bitcoin address - a string of 27-34 letters and numbers - which acts as a kind of virtual postbox to and from which the bitcoins are sent.

Since there is no registry of these addresses, people can use them to protect their anonymity when making a transaction.

These addresses are in turn stored in Bitcoin wallets which are used to manage savings.

They operate like privately run bank accounts - with the proviso that if the data is lost, so are the bitcoins owned.

James Howells lost about £4.6m when he threw away his hard drive, forgetting that he had bitcoins stored on it.
Elliptic co-founder Tom Robinson says the service addresses a 'deep concern' among Bitcoin users Elliptic co-founder Tom Robinson says the service addresses a "deep concern" among Bitcoin users

Unlike money stored in a conventional bank, bitcoins are not insured and there is no way of retrieving them once they are gone.
'Obvious step'

"One of the main concerns people have with Bitcoin is that it's quite difficult to store securely," Elliptic co-founder Tom Robinson told the BBC.

"Offering people an insured storage service seemed an obvious step."

But convincing an insurance firm to trust the nascent currency was not an easy task.

"It was very difficult to find an insurer," said Mr Robinson, an Oxford graduate with a PhD in physics who started the company with two friends.

"The industry is very conservative and they did not understand Bitcoin.

"They were also influenced by the negative publicity Bitcoin received, although this has improved since Silk Road [an online marketplace] was taken down and stopped dominating the Bitcoin agenda."
Layers of security

The company is underwritten by Lloyd's of London, which will give people "more faith in the Bitcoin system", according to Emily Spaven, managing editor of CoinDesk, a digital currency news site.

Insurance payouts will be calculated using the Bitcoin to US dollar exchange rate at the time a claim is made.

Elliptic's focus is on storing bitcoins as securely as possible, using what Mr Robinson calls "deep cold storage" techniques.

Bitcoin keys are encrypted and stored offline. There are multiple copies, protected by layers of cryptographic and physical security.

The copies are accessible only via a quorum of Elliptic's directors.
Illicit financing

Elliptic's launch comes as Bitcoin has been making news around the world, with governments deciding how to legislate for the currency.

Singapore has become one of the first countries to issue guidance on taxation for Bitcoin businesses, although it also said it was monitoring transactions to detect illicit financing by criminals and terrorists.

Bitcoin was less fortunate in China, where the largest online marketplace, Alibaba Group's Taobao, said it would ban virtual currencies.

In December, the country's central bank ordered financial institutions to halt Bitcoin-related services and products.

There was a breakthrough for the currency in the US, however, where Overstock.com became one of the first major online retailers to accept Bitcoin on Thursday.

www.bitcoinstock.info (http://www.bitcoinstock.info)

What kind of rich asshole has millions of dollars worth of bitcoin but can't be bothered to take ONE DAY to learn how to secure them safely and save at least $20,000/year (per million) on fees? This jerk would also have to trust a third and a fourth party (insurer and government) when neither is necessary if you can simply manage to secure or hide A STRING OF CHARACTERS.  It would take at least a day to set up the insurance policy anyway!!

Who could possibly own that much bitcoin and be that stupid? fucking One Percenters playing with other people's money?  How about I teach you how to set up a paper wallet so you can do it yourself. I'll only charge $10,000 and it will take less time than writing up an insurance contract.  Cuz, you know, you just can't find a youtube video showing you how to do that without at least...typing "bitcoin paper wallet" and clicking a search button.

Stupid lazy rich people really piss me off. Give me your coins. You don't deserve them. I'll be buying your house and fucking your wife next year.

The proposition is not as easy as it sounds. In the article excerpt (no source is given) Bitcoin vault offering insurance is 'world's first'  (http://www.bbc.co.uk/news/technology-25680016) BBC Link.

The article does not say anything about storage in multiple locations.

You want to guard against two competing things:

• Theft
• Data loss

I think the current best way to do this is spit the keys with m of n transactions and Pay to Script hash, and store them in 3 geographically separate locations. The actual vaults should be sealed such that tampering can be detected and the keys regenerated if needed (which opens up social engineering attacks).

I am not sure a rich a Bitcoiner can't do better, based on information from the sparse article. Hopefully their insurance company was able to vet their security procedures while keeping the unique properties of Bitcoin in mind.

Tom from Elliptic here.
If you have any questions/comments about our Elliptic Vault service, please post them in this thread:

https://bitcointalk.org/index.php?topic=424215

I agree. The customer is paying 2% of the amount of insurance that they want - not the amount of BTC that they have. So, do you want $1 million? No problem, $20k please. 

Now, when you actually have bitcoin associated with an address that is somehow lost, they're going to ask how much BTC was there.  Oh, you had 1 BTC? Well, here's your $900.   What's that, there were 20000 BTC there? You're capped at the $1 million. Better luck next time. And, it does look like their highest insurance is only $1 million.

I guess this makes sense to some people, but not sure why.

You put cash into savings because it pays a small amount of interest
You put cash into checking because you can write checks and use debit cards
You put cash into certificates because they pay more interest

All of those gets your cash insured as a side effect, but the insurance is not why the people put there money there.

Bankers must look at bitcoin and weep. I bet they would love to charge a $100 up front fee for debit cards and have savings account where you pay them 2% of what you hope to someday have there to hold your money.

Hahahah, actually though it's not so easy as you might think. The money you have the more your 'paperwallet' starts to look like an incredible liability. Secrecy management is actually really hard to do right.

I'm working on a new product with NFC and specialized enclosures designed for wealthy people who might be unsure of how to hold their bitcoin. More news in a number of weeks on that, but I can respect Eliptic Curve. Protecting your bitcoin, especially on a timeframe of years, is not easy.

Anyone who has the ability to properly evaluate how secure your product is does not need your product. everyone else is just relying on a third party (you) to protect their coins. The best held secret is one you tell NOBODY. You could be the most reliable person in the world, and it's still safer to do it myself. it is easy. so easy that it's hard for people to grasp. unscrupulous players take advantage of that.

OK, we get it - you have no need for such a service. No need to be caustic about it.

Everyone has their own needs and desires. Services like these are needed for bitcoin to continue to get more mainstream adoption.

It is very true that bitcoin is too confusing/complicated for the average person and it's also true that the average person prefers to have their money stored and insured by a 3rd party. Just like most people keep most their fiat money in banks or other 3rd parties instead of holding onto it themselves in their house.

For anyone who wants to hold their own bitcoins and be 100% in charge of their own security without having the guarantee of insurance,  you still have that option as well. 

It's a good thing to have more than one option out there, because there's certainly more than one type of person out there with varying needs and wants.

Sure who needs this Bitcoin will never be worth $10,000+ and nobody will ever lose their wallet in the future.

If the guy ever finds his 4 million quids worth of btc in his local landfill he might want to use this service.

What's considered easy for one isn't always easy for everyone. Also everyone has different desires and or different things they view as important or a desire to learn more about it.

I did some construction work recently on a family members house , for me I consider it EASY and by doing it myself I save money and I feel more confident the job will be done right.  With that said, just because I think it's easy to learn doesn't mean other people have the desire to learn or that it's easy for them learn, maybe for them they prefer to pay someone else to do it for them.

Nothing wrong with that. It's good to for people to have options because not everyone is the same.

<headsmack>  a guy who wouldn't take precautions against throwing out his hard drive or OMG backing up his keys would not be forward thinking enough to buy insurance.  He had an insurance option: BACKING UP HIS WALLET. He didn't do it. and it was free. he had or could have easily obtained the technical know-how to "buy" this insurance...FOR FREE.  He was no tech neophyte. Bitcoin is not an attractive asset class to people who feel the need for third party insurance. they are two different kinds of people. Your target demographic are people who are stupid and rich but are smart enough to buy the most complex and new asset class on the planet? Stupid rich people don't stay rich for long. Usually because they run into people like you.

Well, maybe for the first million. You aren't insured over a million, no mater what the value of the coins do. So, it isn't like you're insuring 10k BTC, you're insuring a 1 million pound(?) value in BTC. if the value of the number of BTC goes up to 300 million, you still only have the first million covered in the event of a failure on the part of the company.

So, when you think about it, the company is doing the smartest possible thing in that they're having you, the customer, pick how much 'value' you want covered and agreeing that anything over that that is lost (for what ever reason), is not their fault or their problem. So, they can bank for as many people as they like and they will always have a specifically defined top limit on their liability.

bank vault.  safe deposit box.  one each for each of your USB sticks with 25-50 BTC on it

if you cant trust your local hardware store to sell you a safe. or you cant trust a bank safety deposit service. then why would anyone trust a third party on the other side of the world, that they met through a forum??

bitcoin is about not requiring third party protection/control/storage.