Thank you B.A.S. for the clarification!
Topic: Coinbase and Circle "Bitcoin Insurance": how does it work? (Read 2090 times)
How would this even work in the event of a major hack or theft. I doubt aon has a stack of bitcoins lying around to pay out.
Say a 100,000 btc were stolen, I am assuming aon would provide coinbase with the money to buy those coins, the problem with that is a buy order that large would create a rally and the btc would cost more than when they were stolen.
Or of course the value could plummet after the hack and a dump (lets say 5,000 btc hack, not enough to spur a huge rally when bought back), and then would aon only provide enough money to purchase those btc again (less of a payout by them to coinbase)
These factors lead me to believe their policy is bullshit, and it is something like they are insured for up to $5,000,000 or something, and any loss larger than that, oops were bankrupt.
Say a 100,000 btc were stolen, I am assuming aon would provide coinbase with the money to buy those coins, the problem with that is a buy order that large would create a rally and the btc would cost more than when they were stolen.
Or of course the value could plummet after the hack and a dump (lets say 5,000 btc hack, not enough to spur a huge rally when bought back), and then would aon only provide enough money to purchase those btc again (less of a payout by them to coinbase)
These factors lead me to believe their policy is bullshit, and it is something like they are insured for up to $5,000,000 or something, and any loss larger than that, oops were bankrupt.
You make great points. I am not entirely sure, but here are a few of my thoughts:
1) Aon will only reimburse Coinbase USD in the event of a hack or theft. IMO, CB doesn't actually care about losing its BTC at the end of the day, it cares about losing its USD investment into the BTC ecosystem. As long as they get the market value (most likely more contractually) for their stolen coin, they won't lose a wink of sleep.
2) The policy is BS on the part of the customer. As we have seen lately, CB is really good at saying things they don't mean. Their website has lots of keywords floating around meant to attract customers. They use words like "insured" or "FDIC-wallets" or "fully backed by AAA rated insurance" or "regulated and licensed." These words attract the masses who are ignorant about BTC in general, not the individuals who know whats going on and have been around.
You're right, it is BS. Per the usual, don't keep your coins on the exchange. I see these exchanges as pop up shops until most of the coins are mined. Unless they actually contribute to the ecosystem later (trading platform, remittance, etc.) I predict a large chunk of these exchanges will fold logically when the time comes.
In another thread the issue of bitcoin insurance has popped up.
Apparently Coinbase and Circle say that their exchanges are "insured". What does that mean? How does that work?
Bitcoin payments are irreversible and unless the receiver sends the funds back, there is simply no way to get any amount of coins back.
Let's say I deposit a big quantity of BTCs on Coinbase or Circle. Let's say I pretend to get hacked and I "steal the BTCs from myself" using another computer or the help of a friend who is gonna pretend that he hacked me or whatever.
There is no way in hell that they can know if I'm being hacked or pretending.
Is Coinbase or Circle gonna give me free money if that happens? I highly doubt. How does that work? How can they know I have been hacked for real or I'm just trying to fuck with them, considering BTC payments are irreversible?
How the hell are Coinbase and Circle claiming that they are "insured"?
I haven't really found more informations on their site.
Apparently Coinbase and Circle say that their exchanges are "insured". What does that mean? How does that work?
Bitcoin payments are irreversible and unless the receiver sends the funds back, there is simply no way to get any amount of coins back.
Let's say I deposit a big quantity of BTCs on Coinbase or Circle. Let's say I pretend to get hacked and I "steal the BTCs from myself" using another computer or the help of a friend who is gonna pretend that he hacked me or whatever.
There is no way in hell that they can know if I'm being hacked or pretending.
Is Coinbase or Circle gonna give me free money if that happens? I highly doubt. How does that work? How can they know I have been hacked for real or I'm just trying to fuck with them, considering BTC payments are irreversible?
How the hell are Coinbase and Circle claiming that they are "insured"?
I haven't really found more informations on their site.
Coinbase is insured against itself in the event of fraud or loss of its coin; not individual users. Coinbase is underwritten by Aon for protection of their assets. You as a customer are insured for your coins on the exchange. I.e. if you have 5 BTC on the exchange and Coinable gets hacked; you will get your 5 coins. User negligence (losing your password, compromising of your account credentials, etc.) is not insured against.
How would this even work in the event of a major hack or theft. I doubt aon has a stack of bitcoins lying around to pay out.
Say a 100,000 btc were stolen, I am assuming aon would provide coinbase with the money to buy those coins, the problem with that is a buy order that large would create a rally and the btc would cost more than when they were stolen.
Or of course the value could plummet after the hack and a dump (lets say 5,000 btc hack, not enough to spur a huge rally when bought back), and then would aon only provide enough money to purchase those btc again (less of a payout by them to coinbase)
These factors lead me to believe their policy is bullshit, and it is something like they are insured for up to $5,000,000 or something, and any loss larger than that, oops were bankrupt.
In another thread the issue of bitcoin insurance has popped up.
Apparently Coinbase and Circle say that their exchanges are "insured". What does that mean? How does that work?
Bitcoin payments are irreversible and unless the receiver sends the funds back, there is simply no way to get any amount of coins back.
Let's say I deposit a big quantity of BTCs on Coinbase or Circle. Let's say I pretend to get hacked and I "steal the BTCs from myself" using another computer or the help of a friend who is gonna pretend that he hacked me or whatever.
There is no way in hell that they can know if I'm being hacked or pretending.
Is Coinbase or Circle gonna give me free money if that happens? I highly doubt. How does that work? How can they know I have been hacked for real or I'm just trying to fuck with them, considering BTC payments are irreversible?
How the hell are Coinbase and Circle claiming that they are "insured"?
I haven't really found more informations on their site.
Apparently Coinbase and Circle say that their exchanges are "insured". What does that mean? How does that work?
Bitcoin payments are irreversible and unless the receiver sends the funds back, there is simply no way to get any amount of coins back.
Let's say I deposit a big quantity of BTCs on Coinbase or Circle. Let's say I pretend to get hacked and I "steal the BTCs from myself" using another computer or the help of a friend who is gonna pretend that he hacked me or whatever.
There is no way in hell that they can know if I'm being hacked or pretending.
Is Coinbase or Circle gonna give me free money if that happens? I highly doubt. How does that work? How can they know I have been hacked for real or I'm just trying to fuck with them, considering BTC payments are irreversible?
How the hell are Coinbase and Circle claiming that they are "insured"?
I haven't really found more informations on their site.
Coinbase is insured against itself in the event of fraud or loss of its coin; not individual users. Coinbase is underwritten by Aon for protection of their assets. You as a customer are insured for your coins on the exchange. I.e. if you have 5 BTC on the exchange and Coinable gets hacked; you will get your 5 coins. User negligence (losing your password, compromising of your account credentials, etc.) is not insured against.
Presumably for the same reason that not many people get their mates to burgle their houses and then claim the lost property back on the insurance.
It's fraud.
It's fraud.
Exactly.
Plus I imagine they'll have the best of the best investigating every single case.
Another option is that they'll only insure the wallets on their wallet, this way they are sure if someone hacks them.
I'm sure the insurance doesn't cover user error or negligence.
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What if the insurance company claims Coinbase and Circle were negligent and refuse to pay if they are hacked? I personally know people whose insurance companies refused to pay for car accidents until taken to court over it. Most insurance comes with a massive list of get out clauses which the insurance companies can use to avoid paying out claims.
I'm sure the insurance doesn't cover user error or negligence.
Most exchanges use 2 factor authentication, and it's very unlikely that someone using 2 factor authentication would get "hacked".
If you have a poor password, don't use 2 factor authentication, and get "hacked", I think the exchange would tell you to go pound sand.
Also, if the hacked amount is substantial, I'm sure the exchange would have a fraud department look into it. They can check into ip addresses and things like that.
Most exchanges use 2 factor authentication, and it's very unlikely that someone using 2 factor authentication would get "hacked".
If you have a poor password, don't use 2 factor authentication, and get "hacked", I think the exchange would tell you to go pound sand.
Also, if the hacked amount is substantial, I'm sure the exchange would have a fraud department look into it. They can check into ip addresses and things like that.
Presumably for the same reason that not many people get their mates to burgle their houses and then claim the lost property back on the insurance.
It's fraud.
We are talking about bitcoin (irreversible) payments. As easy as a few clicks (and could be done by scammers in a systematic manner) and there is no way the exchange can know if the hack is legit or a trick. Literally no way (unless you are complete fool and send the coins back to one of your addresses or something lol) It's fraud.
Presumably for the same reason that not many people get their mates to burgle their houses and then claim the lost property back on the insurance.
It's fraud.
It's fraud.
In another thread the issue of bitcoin insurance has popped up.
Apparently Coinbase and Circle say that their exchanges are "insured". What does that mean? How does that work?
Bitcoin payments are irreversible and unless the receiver sends the funds back, there is simply no way to get any amount of coins back.
Let's say I deposit a big quantity of BTCs on Coinbase or Circle. Let's say I pretend to get hacked and I "steal the BTCs from myself" using another computer or the help of a friend who is gonna pretend that he hacked me or whatever.
There is no way in hell that they can know if I'm being hacked or pretending.
Is Coinbase or Circle gonna give me free money if that happens? I highly doubt. How does that work? How can they know I have been hacked for real or I'm just trying to fuck with them, considering BTC payments are irreversible?
How the hell are Coinbase and Circle claiming that they are "insured"?
I haven't really found more informations on their site.
Apparently Coinbase and Circle say that their exchanges are "insured". What does that mean? How does that work?
Bitcoin payments are irreversible and unless the receiver sends the funds back, there is simply no way to get any amount of coins back.
Let's say I deposit a big quantity of BTCs on Coinbase or Circle. Let's say I pretend to get hacked and I "steal the BTCs from myself" using another computer or the help of a friend who is gonna pretend that he hacked me or whatever.
There is no way in hell that they can know if I'm being hacked or pretending.
Is Coinbase or Circle gonna give me free money if that happens? I highly doubt. How does that work? How can they know I have been hacked for real or I'm just trying to fuck with them, considering BTC payments are irreversible?
How the hell are Coinbase and Circle claiming that they are "insured"?
I haven't really found more informations on their site.
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