> You pay for this in bank fees. Nothing to stop somebody starting a Bitcoin insurance, so your money will be as safe as in a bank. That way you get the security without all the extortionate transfer fees.
I can't imagine what the insurance rates could be for Bitcoin exchanges. Definitely a specialty insurance product, if it even exists.
First off, the underwriter would do their due diligence, and see a number of catastrophic losses at Bitcoin exchanges. An exchange gets hacked, it loses EVERYTHING. Compare that to a bank - a bank gets robbed, it loses whatever was in their tellers cash drawers, if that. Maybe thieves make it into the vault (but that's mostly a scenario that happens in Hollywood movies compared to real life). But they certainly don't get the banks balances that are at the Fed, nor do they take over ownership of the banks loan portfolio.
So, looking at Bitcoin exchanges and realizing that when they do get robbed, they lose it all. How do you price that risk? 5% of assets annually? 10%? 20%? And those are fees that exchanges would have to recoup from customers to pay for. Maybe venture capital would pay for it for some time, but eventually that's a cost that will have to be passed on.
Even more alarmingly from an insurance perspective, there is absolutely no guarantee that the private key securing an exchanges funds actually secure. All they can do is infer that it might be secure, since funds haven't been moved in an unauthorized manner. But that doesn't mean that a hacker hasn't found their way into the exchanges computer system and is just waiting for when the time is right. Heck, there could even be a key collision. The math is against that actually happening, but flaws occur.
Point is, if you tally the maximum amount of coins stored at the top exchanges at any given point over the last 5 years, and the amount of coins stolen from exchanges over that time period, it's likely a horrifyingly high proportion. What insurer is going to risk their (and their investors) money on that?