Example: John owns 1 BTC and an equal amount (in value) of Umbrella-BTC. Bob owns 1 BTC. Both are held on Exchange XYZ. Exchange XYZ fails and declares bankruptcy protection. John opens up a claim to the CDIC and gets his Umbrella-BTC returned to him. John is still out 1 BTC, but not completely wiped out by the exchange collapse. On the other hand, Bob has lost all his money and has no where to turn for help. He posts a sympathy thread on reddit hoping for donations :-(
You forget Jack. Jack hold 2 BTC. He keep 1 BTC on Exchange XYZ. Unlike John he never heard about Umbrella-BTC. So he keep another 1 BTC in his own wallet (outside the Exchange XYZ). The Exchange close. Jack lost exactly 1 BTC. He is mad but at least he now he still hold 1 BTC. Meanwhile, John is worried. John is not sure if his claim for the lost Umbrella-BTC will be accepted. Also he has no idea of it's value. He wonder if he lost more than 1 BTC.
Yes, this is a very good example of risk mitigation. We would encourage everyone to be like Jack! For those who aren't, they can use Umbrella to help mitigate some of the risk. We never said this system was perfect, but if I am already mining Bitcoin, Litecoin, Vertcoin or Darkcoin then it costs me nothing to merge-mine Umbrella. There is no reduction of hash-rate on the primary coin you are mining.
Any way you slice it there is no Cryptocurrency offering what Umbrella can. What if Jacks laptop crashes, gets hacked, stolen, his private keys get lost..? Oh, and the exchange happen to skip town. You hear about these types of events on a daily basis. We are not here to convince anyone to use our Cryptos. Like we stated, we are here for the long haul and look forward to bringing some value to the community.
Thank you
Thank you for the reply. I understand better how Umbrella work. But few things make me avoid this coin...
(Take the following as constructive critic. To keep it simple I will talk about BTC and UBTC only.)
In the way you promote your coin, many people believe that this is an insurance for their bitcoins. They think that if they buy some UBTC, you will give them back all their BTC lost. I know that through the replies in this thread you say that only UBTC will be refunded, but obviously many people are still confused. You will have a big Public Relation crisis to manage when the first protected exchange will get hacked. People will expect a refund of their full portefolio. They will riot when they will realize that only UBTC are protected!
You claim that it is a free protection. You can say it's free for me only if I mine bitcoin. However I never mined bitcoins. I only mined altcoins that I sold for BTC. I also gain BTC via investment like in BTCJam, etc. I don't know the stats but I guess that the majority of bitcoins' owner never mined them. So for someone like me, the only way to get UBTC will be to buy them.
Now, what's the point to buy UBTC? I can't buy anything, I can't gamble them (you say you have no plan for that). It's seem to me that the only purpose of UBTC is to store them in exchange and wait to get hacked (LOL). IF UBTC would be a real insurance for my bitcoins, that would be different. That would be a great motive to purchase them. That's why I gave the example of Jack. Better to keep part of your fortune in different basket, rather then buy UBTC.
In short, your target consumer is probably the big bitcoin mining farm but you promote the coin to every bitcoins' owners. To me, this is a wrong move.
And finally, the CDIC thing is really not clear. Like others, I can't help to think that you are more closely affiliated than you claim. The CDCI's website do not look serious. It do not inspire confidence. No name, no adresse, no proof that they comply with the laws.
We welcome constructive criticism. Thank you for taking the time to post.
I honestly think a lot of people don't take the time to read through the announcement. I can cite multiple sections, even an infograph as evidence of this. But if you are stating this, I can rework some of the verbiage and help make it more clear.
I agree, the world is full of people who don't read the fine print.
"You mean my car isn't insured if I crashed it while driving drunk?"Sorry, we are not able to insure your Bitcoins because that would require an Insurance company with massive assets. It would also cost you or the exchange money. We understand a couple companies are trying to break into this market, take a look at
http://umbr.la/1oTjfWv and
http://umbr.la/1ntHQ6nAgain, it just depends on what you mine and what your long term goals are? Are you in this for short term gain? Are you looking to hop from coin to coin, trying to catch pump and dumps? Then yes, I would say skip Umbrella all together.
Yes, the merge-mineable aspect makes it free IF you are already mining one of the major algos. I can see Umbrella-BTC and Umbrella-LTC ending up with large amounts of hash given the environment we are in. This is simply based on the fact that those are the groups mining those coins directly. Umbrella-VTC and Umbrella-DRK will be a different story. Given the algo architecture, these may be the coins for you? These coins were chosen based on popularity and network hash rate. Which we know fluctuates wildly.
Yes, you can buy any other coin to diversify and add a layer of protection to your portfolio. I will ask you the same question: Is it guaranteed to be replaced if lost or stolen?
As far as purchasing and gambling goes, if there is a demand, someone will come in and fill the void. I can guarantee that.
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