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Author Topic: Bitcoin-Insurance.com  (Read 3524 times)
Eisenhower34
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September 14, 2012, 01:38:34 PM
 #1



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.

==========
Code:
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
==========
Code:
A second math example: A user A wants 50% of his capital insured

A invests 50 BTC in Bitcoin Insurance, buying insurance policies and 100 BTC in P bonds paying 7% weekly
B invests 50 BTC in Bitcoin Insurance selling insurance policies

In case P defaults:
A will get 50BTC + 50BTC from BI, lost 100 BTC to P. total 150 BTC investment with 0 BTC interest lost only 50% his capital
B will lose 50 - 22.5 BTC with BI

In case P does not default
A will lose 50 - 22.5 BTC with BI, but get 100 + 125 back from P. total 150 BTC investment with 97,5 BTC interest
B will win 50 + 50 BTC with BI, total 50 BTC investment with 50 BTC interest


Where is the win?
A can make 65% interest in 3 months with 50% of his capital covered!
B can make 100% interest in 3 months with 45% covered in case of a default
==========

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 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 ...
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Eisenhower34
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September 14, 2012, 01:39:59 PM
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Deprived
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September 14, 2012, 02:17:41 PM
 #3


==========
Code:
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


Can see where the win is.  Now let's see where the loss is:

A and B both pay 100 into BI

In case P Defaults.

A gets 200 BTC from BI
B gets 45 BTC from BI

BI loses 45 BTC

In case P doesnt default

A gets 45 BTC from BI
B gets 200 BTC from BI

BI loses 45 BTC

Seems like whatever the outcome BI loses 45 BTC - which you somehow have to make back on a 200 BTC deposit you hold for 1 week - that's 22.5% interest per week you need to make.  You can't manage tha teven if you invest the 200 direct into P yourself and pray he doesn't default.
Lucidize
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September 14, 2012, 02:37:08 PM
 #4

INSUR  ANCE 

Eisenhower34
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September 14, 2012, 03:46:43 PM
 #5

@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. Smiley

@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)
Deprived
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September 14, 2012, 04:20:34 PM
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@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.
exahash
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September 14, 2012, 04:33:09 PM
 #7

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.

Chang Hum
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September 14, 2012, 04:33:22 PM
 #8

@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.
Eisenhower34
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September 14, 2012, 05:04:56 PM
 #9

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.

Quote
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.
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 Smiley
Chang Hum
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September 14, 2012, 05:10:24 PM
 #10

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 which ones I consider "secure". 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.

"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." 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...

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.
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September 14, 2012, 05:28:38 PM
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Where do you live, and how old are you?  The numerous spelling/grammatical errors in your OP scream "unprofessional" to me.
Eisenhower34
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September 14, 2012, 05:39:06 PM
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I live in Germany, so Im no native speaker. Shoot me a pm with the spelling misstakes and ill fix those.
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September 14, 2012, 05:45:19 PM
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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?  Shocked

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Website owners, let me put my ads on your site! PM me!
Eisenhower34
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September 14, 2012, 05:51:02 PM
 #14

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 Smiley

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
paladon
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September 14, 2012, 06:11:51 PM
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I created an account. But can't login.. even after resetting my password...  Huh

Eisenhower34
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September 14, 2012, 06:19:28 PM
 #16

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.
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September 14, 2012, 06:48:11 PM
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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.
Chang Hum
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September 14, 2012, 06:54:20 PM
 #18

You people can't be serious, how did any of you make money in the first place?
Eisenhower34
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September 14, 2012, 08:17:02 PM
 #19

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

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.

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?

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
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September 15, 2012, 12:27:29 AM
 #20

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?
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