Elliptic Vault, a facility that claims to be the “first in the world” to offer insurance to owners of the Bitcoin virtual currency, has been launched in the UK.
According to the BBC, the Bitcoin storage service insures deposits of the digital currency against theft and loss. The service uses a ‘deep cold storage’ in which private encrypted keys to Bitcoins are stored on offline servers in a secure location.
Multiple copies of the Bitcoin keys are protected by layers of cryptographic and physical security, with such copies only accessible via a quorum of the company’s directors.
Online wallets that store the digital currency have been subject to a number of recent cyber-attacks with some users having also suffered from accidental loss. Unlike real money in banks, Bitcoins are not insured and there is no way of getting them back once they have gone.
Tom Robinson, Elliptic Vault’s co-founder, said the new service will address this “deep concern” amongst owners and users of the digital currency.
“One of the main concerns people have with Bitcoin is that it’s quite difficult to store securely,” Robinson said. “Offering people insurance seemed an obvious step.”
Despite his confidence in the new service, Robinson said it was difficult to convince an insurance company to trust the virtual currency.
“It was very difficult to find an insurer,” Robinson said. “The industry is very conservative and they did not understand Bitcoin.
“They were also influenced by the negative publicity Bitcoin received, although this has improved since Silk Road [an online marketplace] was taken down and stopped dominating the Bitcoin agenda.”
Elliptic Vault is underwritten by Lloyd’s of London while insurance payouts will be calculated using the Bitcoin to US dollar exchange rate at the time a claim is made.