— DigitalCurrencyGroup (@DCGco) November 29, 2016
- Setup Bitcoin exchange.
- Insure Bitcoin exchange.
- “Oh no, we’ve been hacked”
- Ensure plausible deniability.
- Sell stolen Bitcoin into the now rife open market*
*So why would the market be rife? You may be asking, because as the insurer needs to replace Bitcoin with Bitcoin the open market which is now likely being deliberately choked off (especially if the hack is public) in order to increase scarcity and thus price has a forced buyer.
Of course insurance fraud is nothing new, people have been insuring then torching businesses and possessions for decades, what they haven’t been doing and what is possible now with this kind of insurance is appearing to lose all your Bitcoins whilst actually keeping them, and getting a fat insurance payout on top, quite literally having your cake and eating it.
The big takeaway from this is, it turns an exchange hack, a normally negative and bearish event into a bullish scenario for Bitcoin given that huge quantities of fiat insurance money is waiting on the sideline to buy and replace stolen Bitcoin, in theory, at any price.