As cryptocurrencies become more and more popular, many other related fields have started developing new products and services on the periphery of the crypto sphere. Cryptocurrency insurance is one of them, as it protects against any kind of loss associated with cybersecurity breaches.
In this article, we will talk about crypto insurance and explain what it is, how it works and what the benefits and challenges of this new type of service are. If you are interested in the world of cryptocurrencies and want to know more about how to benefit from them while being protected against any kind of mishap, you can find some useful information in this article.
The Origins of Crypto Insurance
This type of service was experimented with by Lloyds of London, which was the first major insurance company to offer crypto insurance. It was created by Lloyd’s syndicate Atrium, together with Coincover, and their goal was to create a way to protect against losses dependent on the theft of cryptocurrencies from online wallets.
It is flexible insurance that increases or decreases depending on the price of digital assets. Therefore, the insured person will always be protected by the underlying value of the asset, even if it fluctuates, as crypto does.
The demand to insure your crypto is growing day by day due to the popularity of the currency itself. As crypto grows increasingly popular, so do instances of theft and similar damaging matters. Because of the novelty of this phenomenon, it is important to remember that there is a lack of regulations related to the crypto-insurance industry. It is a new sector that is navigating uncharted waters.
What Are the Benefits of Crypto Insurance?
What crypto insurance covers is heavily dependent on the actual insurer. However, most insurers protect against theft but not against direct loss and damage, and it also does not protect against the transfer of cryptocurrency to a third party. Additionally, it does not protect against the disruption or failure of the blockchain. For example, if you send your Bitcoin to an Ethereum address, or vice versa, this mistake will prove costly and will not be covered.
Eventually, the world of crypto will become more regulated, but until that point, crypto insurance will have to learn from the crypto market what kinds of areas should be covered in the future. There are many resources that can help you understand this world better, such as coinweb.com and other similar sites. There, you can find much more information about this topic.
One of the most obvious benefits of this type of insurance is the protection against hacking and cybercrime. Despite the promise of decentralized finance that many cryptos offer, most people keep their digital assets online on exchanges. With so many coins in one place, exchanges, also known as honeypots in this context, often become primary targets for hackers. If you think it can’t happen to you, just look at the case of Mt. Gox, the largest Bitcoin hack to date. Crypto insurance can protect you from such risks, which is a great benefit to consider.
Together with that, crypto insurance can assist investors in adhering to the ever-evolving and new regulations in the world of crypto. As this is quite a complex matter, people will want to get some help on how to navigate this landscape.
To Conclude
In this article, we talked about crypto-insurance, what it is, how it works and the benefits it offers. This is just a short introduction to the world of crypto insurance, which is a very new phenomenon. We will definitely hear more and more about crypto insurance due to the increasing popularity of cryptocurrencies. There are many benefits to crypto insurance, and the still-developing regulations will benefit from entities that will be able to help investors safely navigate this fascinating world, which is still finding its place in today’s economy.
Members of the editorial and news staff of the Daily Caller were not involved in the creation of this content.