After a series of due diligence roadshows with industry-leading insurers, we are pleased to announce that we have secured insurance coverage for the digital assets that we hold on your behalf - in our online hot wallet. -
Coinbase insures it's cold storage, this is Gemini announcing hot wallet insurance. This is a first for sure.
But I think Coinbase has enough money to cover it's own hot wallet losses anyways.
Still, I think it makes people feel a lot better about using Gemini, especially as I expect the offerings to be slightly different over time at the two exchanges.
That is incorrect.
This is directly from the legal disclaimer at Coinbase.
> Coinbase prioritizes the security of our customer's funds, all digital currency that Coinbase holds online is insured. If Coinbase were to suffer a breach of its online storage, the insurance policy would pay out to cover any customer funds lost as a result. Coinbase holds less than 2% of customer funds online. The rest is held in offline storage.
> Coinbase maintains commercial criminal insurance in an aggregate amount that is greater than the value of digital currency we maintain in online storage. Our insurance policy is made available through a combination of third-party insurance underwriters and Coinbase, who is a co-insurer under the policy.
Insurance makes absolutely no sense for cryptocurrency.
Bitcoin is p2p cash or a p2p asset. Be your own bank.
This means that securing ones private keys is the responsibility of the owner and this comes with a set of advantages and disadvantageous. Trying to blend the benefits of "registered value" with p2p bearer assets means you now have the worst of both worlds and are undermining the reason cryptocurrencies were created in the first place.
Be your own bank! By all means use insurance with registered value where appropriate, but do not undermine the benefits of fungible bearer assets.
this sounds more like insurance as in blackjack.
it's only worth it if you're counting cards, otherwise it's a concern troll that profits from the sucker's realization that they have no fucking clue what's going on. And if you are counting cards, you'd know not to give gemini a reacharound in the first place.
fun fact: consistently predicting insurance was a signal to casinos that you were in fact counting cards
If you manage money for someone else, you need to insure that if you lose that money (stolen, burns in fire, etc.), they have recourse. Big funds need assets they’re managing insured. This one podcast I listen to had an episode about it:
This is indeed important for an ETF , and ETFs may temporarily have their place but too much Bitcoin held in ETFs places the whole ecosystem at risk.
There are some circumstances where investing in an ETF is wise in the future (vs buying BTC directly) such as -
You are investing in Bitcoin directly but your 401k with fidelity is now allowing you to diversify your portfolio more with a BTC ETF. Since your occupation company matches 100% of any % you invest in an ETF (common in the USA) you decide to allocate 10% of your 401k to a BTC ETF. Thus even if you decide to withdraw early and get hit with the penalty, the company doubling your investment is still worthwhile.
In almost all cases people should be controlling their private keys directly though and even in the exceptions like the one listed above one should also make direct investments in Bitcoin as Bitcoins advantages are mostly muted when someone else controls their private keys.
You’re all over the place dude. We’re not talking about insurance for anyone, like Bob who can buy some Bitcoin through Coinbase. We’re talking about insurance for institutional custody.
Here’s the law. If you manage $150mm in assets, you need a certified custodian. Custodianship requires insurance. That’s it. It’s a legal requirement.
I understand the law. Bitcoin was created primarily for regulatory arbitrage, and its security assumptions place it in dire risk if custodians control too much of the supply. The main reason why the segwit2x attack was dropped is there were enough independent early adopters and whales who controlled their private keys to insure the attack would not be successful. (many of which attackers were custodians with large amounts of BTC)
Whether I like it or not ( There are good reasons why ETFs or custodial accounts are dangerous - https://www.youtube.com/watch?v=KSv0J4bfBCc ) it will happen regardless so the best I can do is educate new users why they need to control their own private keys and the purpose of Bitcoin and the pros and cons of registered value vs bearer assets. We should be encouraging millionaires to invest in BTC directly and not buy into ETFs or custodial accounts. We should be telling people to avoid day trading and immediately withdraw their BTC from exchanges as well.
Insured BTC is nothing new either, we had it all the way back in 2013
Notably still absent: insurance for cold wallet, same as coinbase. You know someone has access to cold wallet. If it gets compromised, likely by insiders, the exchange is insolvent instantly and you may see your "insured" money a few years down the road mt. Gox style.
maybe its some scheme where they don't insure the cold wallet cause its fractional reserve, but its good to know if you have coins on there its insured. Big step in right direction. Our money in normal bank accounts isn't really there either. Obviously storing in cold storage on your own is the best , but that's unlikely to gain mass adoption
DIGITAL ASSET INSURANCE
We maintain commercial crime insurance in an aggregate amount that is greater than the value of Digital Assets we custody in trust on your behalf in our online hot wallet (“Hot Wallet”). Our insurance policy is made available through a combination of third-party insurance underwriters.
Our policy insures against the theft of Digital Assets from our Hot Wallet that results from a security breach or hack, a fraudulent transfer, or employee theft.