This is, in its own way, the most interesting story coming out of the BitCoin world right now; in long-term importance it dwarfs Overstock.com taking BitCoin for orders.
I will concede that if this can work and becomes entrenched that my skepticism level will be forced by the evidence to decrease.
The current financial system is already insurance-based (at least in the U.S.). You are protected from fraud in every money system you use. Transaction reversibility seems like a natural result of this, because it significantly reduces the insurance risk.
Essentially, if you have insurance, transaction reversibility becomes desirable (by both parties - bank and client) because it reduces insurance costs.
If I buy a car that was stolen (which I didn't know was stolen), law enforcement will repossess the car, send the seller to jail, and I'm out all of the money I spent.
What is the protection from fraud here?
The whole point about bitcoin is it is virtual. I guess at most a QR code is just not sexy enough.
BTW this is how news is manipulated about what to cover. If you want a lot of coverage for your product, make a lot of media available, photos, video, etc. If you have bad news, political, judicial, etc. makes no audio, video, or photos available by law or otherwise and boom, little to no coverage. Because of "dog vs squirrel" attention span.
Now let's look at this tidbit they repeat in every bitcoin story:
James Howells lost about £4.6m when he threw away his hard drive, forgetting that he had bitcoins stored on it.
This is bbc news, not fox news. I expect better. Did the BBC confirm how many bitcoins were on his hard drive? Did someone look at the blockchain or some other detail? I think not. So I say he lost nothing until proven otherwise.
Seeing how bbc 'news' have covered the NSA scandal so far  I would no longer say there's much difference between bbc and fox. Both are establishment mouthpieces, while one is quite blatant and the other more subtle.
You could perhaps argue that fox 'news' spectators are mostly clueless brainwashed Americans while bbc 'news' still has a strong following among all levels of English society.
He threw out his hard drive without thinking because bitcoin literally was worthless back then. He had no need for a secure vault at the time to store his old broken HDD in.
Digital in generation and transmission.
Virtual in that we treat it like something that has financial meaning and weight.
2. The insurance is fixed in GBP (mostly for financial compliance purposes, rather than malicious intent). So when your holdings rise 10x, you'd have to adjust your contract.
3. "Easy withdrawals" do not sound reassuring on the frontpage. However, somewhere in the FAQ they tell you that there's a 1 BTC limit a day and they get it manually.
We need a personal wallet that locks up your wealth in a multisignature transaction 5-of-9 with 9 of your friends. The key part is to solve privacy issues (I have some ideas) and make UX usable by grandma, even if she forgets her password and loses all backups (I have some ideas). Then, all folks will lock up their funds in a distributed fashion, without any single place becoming too tempting to invade privacy or take funds.
The end result is I now have a choice. I can store my bitcoins on my own computer or pick an insured bank. If the bitcoins are stolen out of the bank I can be sure I will get my money back because they are backed by a very large insurance company.
Llyod's has a huge amount of capital available and they have been in the business a long time. As an insurance company this is important because you get to see lots of black swan events (and realistically how often they end up happening).
I am sure their analysts have looked at what happens if someone ends up stealing all the bitcoins vs how much money they can make off insuring against this risk. They can give bitcoin websites discounts for security audits and how they store their data.
Elliptic does not offer insurance to customers but has to get insurance itself according to the published terms:
'Elliptic Vault shall effect and maintain with a reputable insurance company a policy or policies of insurance providing an adequate level of cover in respect of all liability which may be incurred by Elliptic Vault under this Agreement or in respect of any loss of Stored Funds up to a value of the Specified Cover.'
'In the event of any claim against the insurance company by Elliptic Vault, in respect of any loss, damage or corruption of Stored Funds up the value of Specified Cover, any Stored Funds subject of the insurance claim will be valued at the average USD ask price offered on the Bitstamp exchange in the 24-hour period ending at 00:01 am GMT on the day on which Fees are payable, or on such other basis as the insurer may adopt from time to time.'
Insurance coverage for data loss, data theft etc. is not new, on the contrary, it is quite common if you store digital data and do not plan to go bankrupt because of customers suing you …
Bitcoin is the technology equivalent of the emperor's new clothes.
So I can verify the transaction
> Transactions are irreversible.
I can be sure the transaction is final
> You have no FDIC protection of your savings
I can be sure that no currency can be created out of thin air. I still have the option to buy third-party insurance
> Volatility, volatility, volatility
Better than artificial stability that hides risk
> Oh and now I guess if you really want to hold on to your bitcoins you have to keep them in "deep cold storage," whatever that means
Ownership of the private key(s) is equivalent to ownership of the funds.
> Bitcoin is the technology equivalent of the emperor's new clothes.
Either that or http://tvtropes.org/pmwiki/pmwiki.php/Main/UnderdogsNeverLos... ;-)
You don't hold the private keys when using a third party service, including this insured storage.
You don't hold the private keys when using a third party service.
In traditional finance you ONLY have reversible transactions.
Options are good.
The "freedom fighter" and "fighting the man" themes are going down the toilet so quickly people don't even realize.
Many people, including these self called entrepreneurs, are jumping in because they see an opportunity to make money. Plain and simple, they couldn't care less about Bitcoin, privacy, fighting the man, whatever.
People should be angry the established monetary powers are taking an interest in Bitcoin. At the end, Bitcoin will be just another currency the powers at the top manage, make money on top of it, tax, etc, and what will remain of it?