First ever Bitcoin insurance policy offered by London firm

Bitcoin owners are able to breathe a sigh of relief with the news that the first insured storage service for the currency has been launched in London.

The Elliptic Vault offers “deep cold storage” for the virtual currency that stores the private encrypted keys on offline servers in a secure location to prevent them from being stolen.

"Even if we lose customers' bitcoins or they are stolen, our customers are protected and would be compensated. We believe this is a huge step for bitcoin. It gives bitcoin users some of the peace of mind and security you have with a regular bank account,” Tom Robinson, co-founder of the Elliptic Vault, told IBTimes.

The service is underwritten by Lloyds of London and charges a flat rate monthly fee of 2 per cent of the value of the user’s total deposit in bitcoins. For example £10,000 worth of bitcoins will cost £16.67 per month.

Any users that have coins stolen and make a claim will be paid out the bitcoin value at the time the claim is made.

"Users choose and pay for a set amount of insurance coverage. There's no limit to the number of Bitcoins that can be stored, but in the event of a claim the payout is capped to the level of cover they have specified,” Robinson added.

An insurance policy on bitcoins would have helped James Howells who has become infamous for losing a bitcoin fortune worth £4.6 million when he threw away the hard drive that contained the encryption key.

Bitcoin has had a mixed times over the past six months with peaks and troughs in its value becoming the norm. At one point back in December the price of a bitcoin had reached almost $1,200 [£730] before China deciding to block the virtual currency saw it fall back to around £258.