Lloyds of London has been revealed as the underwriter for the world's first insured bitcoin storage service, recently launched in the UK.
Promising a safe haven for bitcoin storage, financially protected against the anonymous cyber thefts often associated with the crypto-currency, Elliptic Vault claims to use advanced "deep cold storage," meaning customers' coins are both encrypted and stored in secure physical locations.
Tom Robinson, co-founder of London-based Elliptic Vault, said: "Even if we lose [customers' bitcoins] or they are stolen, our customers are protected and would be compensated. We believe this is a huge step for bitcoin. It gives bitcoin users some of the peace of mind and security you have with a regular bank account".
Given bitcoin recently passed the $1,000 milestone for a second time, having surged in value from around $25 a year ago, some lucky users have suddenly found their computer hard drives to be worth many millions of dollars. But bitcoins can be easily stolen by cyber criminals through the use of malware, and due to transactions of the currency being anonymous, getting stolen coins back is almost impossible.
Elliptic changes a flat fee of 2% of the value of a user's deposit - if you want to store £10,000 worth of coins, it will cost £16.67 per month.
Peace of mind
Robinson added: "Securing your bitcoins involves implementing advanced encryption and even then you are still at risk of losing them. Elliptic Vault secures your bitcoins for you and is insured against theft or loss, so our customers can have peace of mind that their bitcoins are safe."
Speaking to IBTimes UK, the company co-founder explained that insurance payouts will be made based on bitcoin's value at the time of the claim, adding: "Users choose and pay for a set amount of insurance coverage. There's no limit to the number of Bitcoins that can be stored, but in the event of a claim the payout is capped to the level of cover they have specified."
Robinson said his company has seen "some demand" for the storage of other crypto-currencies, such as litecoin, and "it's something we're looking into."
An insured storage service for bitcoins will likely prove popular, after high profile stories of thefts and losses have reminded users of the ease with which the currency can be stolen.
In November, James Howells revealed he had lost 7,500 bitcoins when he unintentionally threw away the hard drive they were stored on. At $1,000 per coin, the hard drive's contents would now be worth $7.5 million.