Lloyd's has produced a new report on Bitcoin operations that investigates the key risk factors for the insurance industry. The report presents expert analysis which concludes that although the technology, procedures and practices that underpin Bitcoin are maturing, concerns remain over security and the potential for criminal exploitation.
The report, part of Lloyd's Innovation Series, does not endorse the insurance of Bitcoin operations but rather contributes to the assessment of these risks for insurance purposes.
• Bitcoin offers a lower cost alternative to established banking and money transfer systems.
• The particular characteristics of Bitcoin make it an attractive target for cyber attack and therefore, the security risk will never be reduced to zero. The establishment of recognised security standards for Bitcoin storage would greatly assist risk management and the provision of insurance.
• It is essential for the long term viability of Bitcoin that it does not become synonymous with crime. The Bitcoin community should co-operate with law enforcement agencies to prevent exploitation by criminal networks.
• Insurance can be a key component of responsible risk management to enable the next phase of Bitcoin's evolution.