Quote from: bitprotection on March 05, 2012, 05:10:39 PM

Quote from: stochastic on March 05, 2012, 06:47:44 AM

Quote from: bitprotection on February 24, 2012, 11:24:25 PM

I'm sure this idea has been played about before here but to lazy to search around on here but what if there was some sort of Bitcoin Business Insurance? In other words, the bitcoin business front's a certain amount of bitcoins to insure he/she is serious about doing bitcoin business in this community. In other words, some new bitcoin company comes along and doesn't know how to "gain any trust" ( looks overwhelming) can at least rest assure anyone he does business with that he has enough coins to compensate them for whatever happens. So it would be transparent - a certain amount of coins for the public to see against their business - if they decide the run and there are people effected by this people can issue claims and have funds released. I don't know just trying to see how we can introduce more trustworthy business to our ecosystem! Grin

obviously, by my handle here I'm interested in this stuff! haha

I have been thinking about this a lot too. How to insure people's money when no one trusts each other. Bitcoin is a system that allows people to exchange money that don't need to trust each other.

Maybe a better way is to set up an exchange that allows bets by the community on the likelihood of some type of business failure (ie, wallet theft, business incompetence, or outright scams).

For example, lets say I put some money into Bitscalper, but I am hesitant because I don't trust them. I buy a bet on the website that says that Bitscalper will fail. There needs to be clear contractual agreement of what constitutes a win when the business fails.

Anyway, say I have 100 bitcoins in Bitscalper and I insure 0 to 100% of those bitcoins. A speculator bets that Bitscalper wills stay solvent so they take the bet.

The market needs to stay liquid enough so that if I close my Bitscalper account I can also sell back my bet to the market since I don't need it anymore.

People may not trust anyone else, but they sure like to speculate.

I do like the idea as you are right people love to speculate. Probably could bring that over to that bitcoin betting site that lets you bet on everything forget the name of it. You could still speculate if you wanted to "add" to the bitcoin business's deposit amount because you have confidence they will remain. Maybe in return , if they are there 6 months later you get the excat amount you put in 1 to 1 - so you add 10 btc to the 100 btc the business put up. In 6 months, you get 10 of that 100 btc for being right and the company has to front another 10 btc thus you start seeing a community rallying around the success of a company. Good thinking!

Another good thing about doing it this way is that this is not considered gambling. Since risk already exists by someone putting their money in a bitcoin financial company, that risk is just being transferred to someone else in exchange for a cost. Something is considered gambling if risk is created like when someone goes in a casino and bets on a craps table. The act of betting is creating risk.

The below quote better explains the process of insurance betting, but in my case I am suggesting to allow institutions and individuals to use them.

Quote

insurance derivatives base their value on a predetermined insurance-related statistic. For example, an insurance derivative could offer a cash payout to its owner if a specific index of hurricane losses reached a target level. This would protect an insurance company from catastrophic losses if an exceptional hurricane caused unforeseen amounts of damage.