The mybitcoin.com taught us a lesson

[qikaifu]

If you have to trust some people, they must at least be willing to tell their real identity information.

[GeniuSxBoY]

How do you know it's real?

[the founder]

How do you know it's real?

I donno... I had comodo calling the office every 20 minutes asking for our Tax Identification Number, company revenue, etc etc..    eventually we worked thought the process of validation and got the greenbar SSL cert from them.

https://bank.flexcoin.com

So yes you can be sure that Yooter Interactive was verified as a valid company based in Pottsville, PA ...  it's why we opted for that version rather than just the standard SSL.

 

[matt.collier]

Class 2 digital certificates can be used to identify individuals in a similar fashion.

http://www.globalsign.com/authentication-secure-email/digital-id/index.html#tab2

[bitplane]

Question to Flexcoin: do you have insurance in case you lose everyone's accounts in a hack attack or similar?

[the founder]

Question to Flexcoin: do you have insurance in case you lose everyone's accounts in a hack attack or similar?

We initially thought that we could pay the exchanges to insure us,  until Mt. Gox was hacked themselves leaving us to question ...    Our next thought was to turn to Deepbit and perhaps insure it via a mining company.   

Any ideas?

[Rassah]

Why not just get plain business liability insurance, and up your coverage as you increase deposits? It will cost you, and you will likely have to submit to security and business audits by the insurance company, but otherwise should be sufficient. If you lose people's money, just use insurance to buy more.
Though, you mentioned your bank will be free? So getting money for business insurance premiums (not cheap) will be tough...

[smoothie]

Question to Flexcoin: do you have insurance in case you lose everyone's accounts in a hack attack or similar?

We initially thought that we could pay the exchanges to insure us,  until Mt. Gox was hacked themselves leaving us to question ...    Our next thought was to turn to Deepbit and perhaps insure it via a mining company.   

Any ideas?

I wonder if we should start providing insurance through the UABB as well.

I'm new to insurance for information products/data. What kind of terms/fees are typical?

Also, considering the ease of backing up Bitcoins to multiple locations, what would be the negatives of keeping the encrypted wallets in the cloud?

I'm not sure insurance is a feasible idea for bitcoin just like loans in bitcoin are likely not to work given the nature of bitcoin.

Ultimately insurance is somewhat a ponzi scheme (a legal one at best) in which customers (investors) pay their premiums to be "insured" while you pay older investors that collect on their insurance policy.

How do you insure something that is of limited supply and that could have a vast price movement in short periods of time?

If bitcoin continues in a Bull market you will ultimately lose as an insurance company for bitcoin.

[smoothie]

If bitcoin continues in a Bull market you will ultimately lose as an insurance company for bitcoin.

Then how about just a backup-insurance service? You use TrueCrypt, a publicly distributed open source encryption program, to encrypt your wallet with Serpent-TwoFish-AES, then you transmit it over HTTPS to the service where it is backed up in 3 physical locations same day.

Charges for this service could be based on updates. Whenever you want to update your wallet, you need to pay a fee, otherwise, maybe a fee that equals your portion of all the fees incurred by the service provider to store the USB drive(s) inside of physical bank vaults and drive to the banks daily to physically update them with a laptop.

Did I just basically give a million dollar idea away? 

Once again there is the trust issue involved. A user has to trust the service provider. Bitcoin was designed so you don't need to trust anyone but yourself by keeping your own bitcoins safe and in YOUR possession.

What happens if your service you have described crashes in the worst possible case? Who will insure you?

The idea still does not seem practical from any angle that I can see.

[Mt.Fun]

Then how about just a backup-insurance service? You use TrueCrypt, a publicly distributed open source encryption program, to encrypt your wallet with Serpent-TwoFish-AES, then you transmit it over HTTPS to the service where it is backed up in 3 physical locations same day.

I highly doubt there will be a trust issue.

lol

[JeffK]

You say "taught" like the community absorbed the lesson it learned from this and won't make the same mistake next week with another sketchy service.

[bitprotection]

If bitcoin continues in a Bull market you will ultimately lose as an insurance company for bitcoin.

Then how about just a backup-insurance service? You use TrueCrypt, a publicly distributed open source encryption program, to encrypt your wallet with Serpent-TwoFish-AES, then you transmit it over HTTPS to the service where it is backed up in 3 physical locations same day.

Charges for this service could be based on updates. Whenever you want to update your wallet, you need to pay a fee, otherwise, maybe a fee that equals your portion of all the fees incurred by the service provider to store the USB drive(s) inside of physical bank vaults and drive to the banks daily to physically update them with a laptop.

Did I just basically give a million dollar idea away?  

Matthew, that is basically the service we offer. We tuck away a copy of your wallet.dat and can even insurance against it. Of course trust is the biggest issue for any service like this so we'll see how it turns out!

[Rassah]

I wonder if we should start providing insurance through the UABB as well.

I'm new to insurance for information products/data. What kind of terms/fees are typical?

Also, considering the ease of backing up Bitcoins to multiple locations, what would be the negatives of keeping the encrypted wallets in the cloud?

Insurance fees will depend on the number of companies you are insuring, and the risk that those companies pose. Basically, if you have 10 companies, each insuring for $10,000 ($100,000 total), and there is a 10% chance that every year one of them will fail and file a claim (for $10,000), you need to make sure each company pays at least $10,000/10=$1,000 a year.
Your major hurdles will be
1) Getting enough people paying enough into a pool large enough to get it at least started, since insuring even just two companies means that you may need both of them to pay half of what they may be worth. If their risk is small, that may make things easier a bit.
2) Calculating the risk of each company will require some professional accounting help. They're called actuaries, there are typically 3 to 6 of those graduating from about 100 general accountants a year, so they're rare, and they are VERY expensive.
3) You will need someone doing on-site inspection of every business you are insuring to come up with initial rates, to make sure they are staying compliant, and to inspect them once they file a claim.
In short, it's not a cheap service to get off the ground. Though if you think there is a need for it, it may be something people are willing to invest in to get the initial insurance pool (of money) going.

As for how to insure Bitcoin, just issue policies in other currencies (USD/EUR), and when the business loses Bitcoin, they'll use their insurance to buy more. They would only be covered for a set amount of USD, so it will be up to the business to make sure they increase their coverage if they get more customers or the value of BTC goes up. Insurance companies aren't liable if the business can't cover all their losses because their coverage was small (ditto for you people with too little coverage on your houses or cars; if your house burns down or you hit a Ferrari, and your policy doesn't cover your losses, you're SOL).
I suspect there are already other insurance companies that insure sensitive valuable data. They may have trouble understanding what Bitcoin is for their "insurance audit" purposes (from #3 above), but they will likely come around.

[Mt.Fun]

Matthew, that is basically the service we offer. We tuck away a copy of your wallet.dat and can even insurance against it. Of course trust is the biggest issue for any service like this so we'll see how it turns out!

Okay, but from what I read it doesn't seem like the wallets are encrypted before being sent to your server, only sent through an encrypted connection. Is this correct?

Matthew... what is that pink drapery in your background?

[Mt.Fun]

Matthew, that is basically the service we offer. We tuck away a copy of your wallet.dat and can even insurance against it. Of course trust is the biggest issue for any service like this so we'll see how it turns out!

Okay, but from what I read it doesn't seem like the wallets are encrypted before being sent to your server, only sent through an encrypted connection. Is this correct?

Matthew... what is that pink drapery in your background?

Fix your monitor settings, it's purple, and although it doesn't make it any less queer, that office interior decorator had the nerve to put up a flowery pattern wallpaper. -_-;;; The NERVE. 

Yea, you might need to get a new interior decorator. Maybe get someone with less NERVE

[bitstarter]

interesting!

[bitprotection]

Matthew, that is basically the service we offer. We tuck away a copy of your wallet.dat and can even insurance against it. Of course trust is the biggest issue for any service like this so we'll see how it turns out!

Okay, but from what I read it doesn't seem like the wallets are encrypted before being sent to your server, only sent through an encrypted connection. Is this correct?

Well people can encrypt the wallet.dat file like they normally would and then send it. There is no reason for us to be "poking" around in it. The minute it arrives it is pull downed offline and stored away.

[bitprotection]

There is no reason for us to be "poking" around in it. The minute it arrives it is pull downed offline and stored away.

That's...not really the point..... You could say the same thing for the owner of MyBitcoin.com. He has no reason to go poking around either, and we have yet to see if he actually did or not but still...

Judging on this alone, I can tell you right now that no company that backs up consumer wallet files on remote servers, regardless of how secure they may be, would ever receive accreditation from the UABB unless the wallet files were encrypted BEFORE transmitting to the service.

It's nothing personal to your intentions mind you, it's just common sense. Why wouldn't you look and why would you look have the same amount of equal arguments. It's best to erase the possibility of looking altogether. You'll have to learn (or hire someone) to take apart the TrueCrypt code and make a client of your own for people to be able to download (or just have them use TrueCrypt) if you expect to be taken seriously in the current nervous climate.

Matthew N. Wright

Will of course the owner of Mybitcoin took off with the coins! It would take one time of that and our service is dead on arrival what is the point? So I guess no service is to be trusted I suppose it makes sense.  We don't back it up to a server ?  I hear you what your saying! Thanks for the feedback

[Mt.Fun]

There is no reason for us to be "poking" around in it. The minute it arrives it is pull downed offline and stored away.

That's...not really the point..... You could say the same thing for the owner of MyBitcoin.com. He has no reason to go poking around either, and we have yet to see if he actually did or not but still...

Judging on this alone, I can tell you right now that no company that backs up consumer wallet files on remote servers, regardless of how secure they may be, would ever receive accreditation from the UABB unless the wallet files were encrypted BEFORE transmitting to the service.

It's nothing personal to your intentions mind you, it's just common sense. Why wouldn't you look and why would you look have the same amount of equal arguments. It's best to erase the possibility of looking altogether. You'll have to learn (or hire someone) to take apart the TrueCrypt code and make a client of your own for people to be able to download (or just have them use TrueCrypt) if you expect to be taken seriously in the current nervous climate.

Matthew N. Wright

Will of course the owner of Mybitcoin took off with the coins! It would take one time of that and our service is dead on arrival what is the point? So I guess no service is to be trusted I suppose it makes sense.  We don't back it up to a server ?  I hear you what your saying! Thanks for the feedback

Dude, don't listen to that guy. The "UABB" is just something he made up to feel important. Anyone who trusts the "UABB" is a fool. Do your own service and build up your own reputation by your own good customer service.

[bitprotection]

There is no reason for us to be "poking" around in it. The minute it arrives it is pull downed offline and stored away.

That's...not really the point..... You could say the same thing for the owner of MyBitcoin.com. He has no reason to go poking around either, and we have yet to see if he actually did or not but still...

Judging on this alone, I can tell you right now that no company that backs up consumer wallet files on remote servers, regardless of how secure they may be, would ever receive accreditation from the UABB unless the wallet files were encrypted BEFORE transmitting to the service.

It's nothing personal to your intentions mind you, it's just common sense. Why wouldn't you look and why would you look have the same amount of equal arguments. It's best to erase the possibility of looking altogether. You'll have to learn (or hire someone) to take apart the TrueCrypt code and make a client of your own for people to be able to download (or just have them use TrueCrypt) if you expect to be taken seriously in the current nervous climate.

Matthew N. Wright

Will of course the owner of Mybitcoin took off with the coins! It would take one time of that and our service is dead on arrival what is the point? So I guess no service is to be trusted I suppose it makes sense.  We don't back it up to a server ?  I hear you what your saying! Thanks for the feedback

Dude, don't listen to that guy. The "UABB" is just something he made up to feel important. Anyone who trusts the "UABB" is a fool. Do your own service and build up your own reputation by your own good customer service.

Thanks Mt. Fun I'll remember that he is as much the same boat as me when it comes to a service.  I'll take your advice and build up some reputation and provide good customer service! sound advice. Thanks!