Bitcoin Companies Who Reimburse Losses Stay Alive

[SmartIphone]

It depends on how much bitcoins do they leave in the hot wallet or in the 'cold' wallet because recovering tens of millions of dollars is not easy and can not be recovered in a short period of time.
I don't like to see this kind of statements from big companies but if they say that have a huge reserve capital then lucky them and lucky their users.

if the recovery plan is based on trading fee's recouping losses.. then lets take bitfinex for instance
they have done $4.5m in volume today based on https://coinmarketcap.com/exchanges/bitfinex/
which at a 0.3% fee (0.1% take 0.2%make) works out at $13.5k in fee's
even if they ploughed every penny of the fees into making everyone whole. its still 5,300+ days (upto 15 years at current volume) to actually make people whole again

so bitfinex for example better have some reserves. or can buy the debt back at pennies to the dollar as a settlement agreement with their creditors/debtee's(customers) or they are in for a world of hurt

after all
lets pretend they never needed to spend any money on wages, offices, servers, etc over the last 2 years, just so they could build up a reserve.
checking* they had an average $6million trade volume a day* ($20k fee) it would have still taken them 10 years to rake in enough reserves to have $72m.
*2 year average from stats

knowing they actually were spending fee's on business costs over the last couple years. there is no way they have reserves to cover the loss and no way they can make anyone whole again in the next couple years using future fee income either.

not unless some numpty buys the business valued at (-)72mill for a single $1. and puts in the other 72m to make customers whole again.
.. knowing that at their best years (prior to hack) it would take 10 years to just get 72m in fee's before business cost deductions. i cannot see any numpty investing 72m to make customers whole..
or as i said not unless they can settle with their creditors/debtees(customers) with a pennies on the dollar settlement.

All their staff and employees didn't volunteer for 10 years to cover the loss, but I think that they have got any investor which invested there and those funds can cover the loss.
I don't know what have they planned and how will they deal in the future, increasing the fees? or any other extra service which can generate income.

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[thejaytiesto]

Xapo claims to have bought the most secure cold storage ever by having an actual physical cold stored bunker in some weird place in the middle of some mountains or something like that. If those guys get hacked too it would be a disaster, no way they would recover. Bitcoin can recover of anything at this point, but it would suck.

[Dudeperfect]

After all its all about trust and goodwill. I don’t have even a 0.001% hope that Bitfinex will reimburse any amount to those who lost their funds. In fact I read that Bitfinex is going to utilize funds of those depositors who were not affected by the hack. This is something like taking our of one’s pocket and giving it to another, that’s not fine in my opinion. Accidents are part of life but precaution control’s damage.

[franky1]

but I think that they have got any investor which invested there and those funds can cover the loss.
I don't know what have they planned and how will they deal in the future, increasing the fees? or any other extra service which can generate income.

ive done some investing and in no way would any investor invest in anything that has stats to suggest 10 year break even.

even if you have a percentage ownership/control of the company you are still hoping for positive returns within 2 years. or without controling interest (treating it more like a loan) then the sooner the better

no one invests long term unless there is real (instant profit) collateral up for grabs that can be sold easily.
EG banks do the magic money creation for a mortgage agreement at a real world cost of 5% and then charge the mortgagee 190% over 10-30years knowing the end result is 5% cost upfront with either a house to sell if they default or 190% if the mortgage pays off. win win..

a few years ago IT companies had 'offers' of upto 70x the businesses value.. but recently there has been a correction in that insanity (bar a few exceptions)

if bitfinex was to offer me 50% control of bitfinex, id laugh at them. they are in no way worth $72million of any investors money. if anything $3million for 50% control would be a tempter.

sorry but i just cannot see bitfinex getting bailed out by investors, or having the reserves to cover losses.
the only scenario i see playing out is trying to settle the debt at pennies to the dollar

[posternat]

Xapo claims to have bought the most secure cold storage ever by having an actual physical cold stored bunker in some weird place in the middle of some mountains or something like that. If those guys get hacked too it would be a disaster, no way they would recover. Bitcoin can recover of anything at this point, but it would suck.

Xapo also claims that they will compensate their customer in case of hack and their customer will not lose anything. I think this is just a marketing tactics.
If ever Xapo get hacks then we shall see a different recreation from their team as they cant give lost bitcoins to customers from their own pocket.

[Kprawn]

Xapo claims to have bought the most secure cold storage ever by having an actual physical cold stored bunker in some weird place in the middle of some mountains or something like that. If those guys get hacked too it would be a disaster, no way they would recover. Bitcoin can recover of anything at this point, but it would suck.

Xapo also claims that they will compensate their customer in case of hack and their customer will not lose anything. I think this is just a marketing tactics.
If ever Xapo get hacks then we shall see a different recreation from their team as they cant give lost bitcoins to customers from their own pocket.

How are they going to reimburse people's losses? These services are in competition with each other, and they will do and say anything to capitalize on the situation to gain more market share. Xapo was

a faucet heaven in the beginning and then they pushed out all those users in favor of KYC/AML regulations. I will not believe anything they say. If you want to reduce your losses, just stop storing huge

amounts of coins on these services. 

[lumeire]

On a different note, this is probably why some people wants to push for tighter regulations of exchanges.

[coinzat]

even the companies that does not cover the losses continues working and people are making more deposit. look at the trading volume in bitfinex and you can see people still use the site so far

[vero]

they can tell it like it and in my opinion there are two great factors as selling points:

1. their say as it will attract user to use their services

2. because this does not happen with xapo so they can just say it like that but when it get hacked will there be any guarantee that we can ask them to Reimburse our losses.

[illyiller]

Talk is cheap.

Basically, this. Every business that acts as custodian of your bitcoins is going to tell you that they will cover any losses. Bitfinex covered all losses when it was hacked previously. It's true until it isn't. I doubt Xapo controls 120k BTC, but if they ever lost that amount, I assure you they wouldn't be covering the loss. They would probably go straight into receivership.

[Doamader]

The thing is the exchanges are earning high and the security level should be the best and with bitfinex we  see again companies dont think about any possible hacker skilled. I believe just poloniex were able to repay their costumers the ammount hacked in the past, since then i dont see any problem at their, sure they are paying atleast 30% of what they earn, but security issue its a must to any business holding several bitcoins.

[tririllstar]

It’s really not surprising. Customers trust companies that care. I would stick with a company if they gave back what was stolen due to an error on their end. The fact that it is bitcoin makes it even more important. Many people want security with bitcoin and by reimbursing people for their losses that helps to build invaluable trust.

[SmartIphone]

It’s really not surprising. Customers trust companies that care. I would stick with a company if they gave back what was stolen due to an error on their end. The fact that it is bitcoin makes it even more important. Many people want security with bitcoin and by reimbursing people for their losses that helps to build invaluable trust.

How do you identify the companies that will give you back the stolen money?
The only one that I know is Xapo which made a public announcement but which another company behaves the same?

[coinoclock]

Who would trust words from exchange/services which isn't strictly regulated, don't forget cases such as Bitfinex and Mt. Gox
On other hands, few people still use this kind of services even though they know the risks and know there's other choice such as decentralized wallet or hardware wallet.

such services want to ease the minds of their customers and those customers want to hear exactly that. but what happens if something goes wrong is a different story. it is easy to break a promise or interpret it differently
just be aware of the risks and act accordingly.   

[fireball4]

On a different note, this is probably why some people wants to push for tighter regulations of exchanges.

you are right, in my opinion regulations should be huge because if this will not happen then there might be more and more problems with them

[panju1]

It’s really not surprising. Customers trust companies that care. I would stick with a company if they gave back what was stolen due to an error on their end. The fact that it is bitcoin makes it even more important. Many people want security with bitcoin and by reimbursing people for their losses that helps to build invaluable trust.

How do you identify the companies that will give you back the stolen money?
The only one that I know is Xapo which made a public announcement but which another company behaves the same?

Since they can't be held legally to act on that statement, it really doesn't help.
Plus they may not have enough reserves to actually refund customers if they were hacked.
So the question of whether they intend to refund customers is moot.

[cpfreeplz]

Haha ok and if my house burns down the insurance company will replace everything within the house. Oh except this isn't covered, and that and this other thing. But in the end 8-18 months later you'll definitely have 40-80% of your funds back (assuming it wasn't your fault your house burned down!)

Or: You could not smoke in bed next to your oily rag collection.

Why wouldn't they just secure their funds better? Banks have had such strict rules for centuries but these clowns get hacked left right and centre in an economy/ community that's completely focused on security. What a clusterfuck.

[SmartIphone]

It’s really not surprising. Customers trust companies that care. I would stick with a company if they gave back what was stolen due to an error on their end. The fact that it is bitcoin makes it even more important. Many people want security with bitcoin and by reimbursing people for their losses that helps to build invaluable trust.

How do you identify the companies that will give you back the stolen money?
The only one that I know is Xapo which made a public announcement but which another company behaves the same?

Since they can't be held legally to act on that statement, it really doesn't help.
Plus they may not have enough reserves to actually refund customers if they were hacked.
So the question of whether they intend to refund customers is moot.

WHAT WOULD HAPPEN IF XAPO GOT HACKED From this article Xapo guarantees that their users will not lose any money.
I haven't seen any other company or exchange which made a similar statement about their reserves and if they planned any plan B in case of any hack.

[Dinki]

I still retain my stand that exchanges need to be insured, should a hack occur, the customers will not feel it.

When banks are robbed, customers do not pay for the robbery.

[knightkon]

A recent blog post from Xapo called “What happens if Xapo gets hacked?” the company discusses the unfortunate Bitfinex heist that took place on August 2, 2016. Xapo says that if they were compromised the company would cover the losses from its own reserve. This is a glaring difference to the many exchanges that failed to reimburse their customers.

It will be interesting to see how Bitfinex fares after their losses as it was the biggest Bitcoin exchange heist since the demise of Mt Gox. It’s safe to say exchanges that don’t pay their customers back in full will discourage new users from entering the Bitcoin space.

https://news.bitcoin.com/bitcoin-reimburse-losses-stay-alive/

I think that XAPO has a lot more growing to do and they way they are approaching their work, they are going to have a long life to live.  They actually seem to care about their customers and I am glad to hear something like this come from them.  I am glad I have a wallet with them.