The collapse of the world’s biggest Bitcoin exchange has fuelled demand for an insured cryptocurrency storage service, claimed its co-founder.
Mt. Gox closed after losing a suspected 744,000 bitcoins, or $350m, last month, blaming a flaw manipulated by hackers, and London’s first Bitcoin cold storage service claimed the collapse has spurred demand for its own services.
Tom Robinson, co-founder of Elliptic Vault, told CBR that his business is in "advanced discussions" with 10 companies including law firms and hedge funds about storing their bitcoins with Elliptic, while two have signed up.
While that may not sound like a lot, he added that it shows the landscape has changed dramatically from just one year ago.
"It’s significant that financial institutions are getting involved," he said. "It’s definitely becoming much more important to be able to trust a third-party with your bitcoins after Mt. Gox.
"It gives people another comfort. These hedge funds and law firms are still in the minority, but this time last year this was unimaginable."
One of the companies to sign up to Elliptic is Selachii LLC, the law firm filing a class action lawsuit against Mt. Gox on behalf of 400 of its former users.
Selachii has announced it will accept payment in the cryptocurrency, storing those with Elliptic.
Bitcoin investment fund Falcon Global Capital is the other new customer, after making the headline recently for offering to buy the $14.8m worth of bitcoins held by the FBI after it seized the funds from illegal online drug marketplace Silk Road.
Robinson said Elliptic’s method of storing the digital medium of exchange is different from Mt. Gox’s.
"What Mt. Gox was doing was pooling bitcoins together, while in our service everyone’s funds are segregated into separate [wallets]."
The cold storage service only opened in January, with any loss or theft underwritten by Lloyd’s of London for a fee of 2% a year.
Bearing in mind fluctuations in the value of Bitcoin, customers peg a limit to their cover in sterling, so if their bitcoins break that threshold they will have to raise their premiums.
From today, Elliptic also provides customers with the option of receiving any compensation in bitcoins, instead of just sterling, after a number of requests from customers.
