January 9, 2014 6:42 PM UTC

Elliptic Vault In The United Kingdom Is Offering Fiat Denominated Bitcoin Insurance, Who Would Want It?

As released earlier today via Bitcointalk: The United Kingdom is the first to have a fully legal fiat backed insurance system for Bitcoin.  The service is underwritten by Lloyd’s of London.
From the co-founder of Elliptic Vault, Tom Robinson:

“Thank you for your support for BitPrice and of our mission to establish a fully-regulated digital currency exchange. We sincerely hope you’ll continue to support us as we move forward with a new name and new services. While an exchange is not Elliptic’s first service, we remain committed to achieving this goal.
Together with the digital currency community we continue to actively work with regulators and government, to ensure a sustainable future for digital currencies, both in the UK and globally.”

Mr. Robinson’s previous endeavor, BitPice, was unsuccessful due to his inability to find a UK banking partner willing to work with him.  This is likely due to the hazy definitions about Bitcoin taxability in the United Kingdom in 2013, things have since been cleared up by Her Majesty’s Revenue Service.
Mr. Robinson also admitted that finding an insurance underwriter was no easy task; however, unlike finding a banking partner for his exchange, this endeavor actually came to fruition.

While this is the first company to offer Bitcoin insurance, it is definitely not the first company or firm in the world to provide encrypted cold storage and the like.  In fact, American users will be relieved to know that Coinbase also follows such cold storage procedures.
In this writer’s opinion: Bitcoin insurance is better provided by the individual.  While certain investors might find solace in a fiat denominated and insurance underwritten “guarantee” to the fiat value of his or her Bitcoins, the 2% fee for the simple cold storage services is a little hefty.  There is no added security that an individual could not take upon themselves, and in fact the only innovation is the fiat denominated coverage.
Elliptic says specifically that Bitcoins are insured against theft or loss, if their cold-storage is set up properly there is absolutely no risk for loss of Bitcoin.  The risk for theft is almost infinitely less than the risk of theft of your jewels within a safety deposit box at the most secure bank, because there is the added layer of encryption.  Again, all these are things that individual Bitcoiners can secure for themselves with better efficacy than Elliptic for a fraction of the cost.

A special thanks to Emily Spaven of Coindesk for providing up-to-date information about Bitcoin out of the UK.

Caleb Chen @bitxbitxbitcoin

Caleb is a graduate of the University of Virginia where he studied Economics, East Asian Studies, and Mathematics. He is currently pursuing his MSc in Digital Currency at the University of Nicosia.

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