Whenever a new industry appears, like blockchain and crypto in this case, new trends come following. The new trend that has everyone’s attention recently is the concept of crypto insurance.
Why do crypto firms even need insurance?
Insurance is a concept that we are already familiar with and it has already secured its place in the world of traditional finance. As such, it is not unexpected for insurance providers to notice that the new financial industry might be in need of businesses-insuring too. Digital coin holders wish to protect themselves and their funds from theft, which is only natural.
When you are already worried about being scammed out of your money, constantly hearing about that happening to others in your situation is not helping. Hacking attacks are even more mystical to those who are not as tech-savvy. Even the crypto exchanges, where most crypto trading takes place, are known for falling before a hacking force, often losing millions or even hundreds of millions of dollars. Coincheck’s hack from the beginning of the year is a perfect example of this.
So, in a situation like that, it is understandable for investors to wish to get insurance and make sure that they won’t be ruined if something happens to their money.
Who to turn to for crypto insurance?
Now that token holders have decided that they are interested in getting their digital money insured, the next step is discovering who can provide such services. Up until recently, there were not many companies to turn to, but they have started coming to the crypto world one after another. Some of the biggest names in the crypto insurance game right now are Great American Insurance Group, XL Catlin, Chubb, and Mitsui Sumitomo Insurance.
These insurers are covering various cases and possibilities. Mitsui Sumitomo Insurance has a wide number of packages that are even covering things like employee theft, unauthorized access, and regular mistakes. There are contracts to cover a range of amounts, from $88,550 to $8,850,000.
The emerging trend is new in its adoption but many of these companies have been preparing their services to accommodate the needs of the blockchain technology for a while.
A company called Line, which is primarily Japan’s messaging app, has started introducing insurance to their users, as well as offering loans. This has been recognized by other companies who have started to follow suit.
A firm called bitFlyer, another company from Japan that is providing its users with Bitcoin-related transaction packages, has made its cover available to everyone willing to use BTC as a payment method. With all of this happening at once, the number of crypto startups continues to rise faster and faster,
There ARE risks involved
Despite the fact that the new development sounds like a field day for crypto-related firms, it is important to note that there are risks involved. Unscrupulous companies may not be related to the crypto business at all and this is something that insurance companies have to consider and find a way to quickly and properly determine that they are not supporting and protecting scammers.
Another risk is that the companies might overstate the amount of insurance that they have. The investors have the right, and the necessity, to know this information before making a decision.
The insurance industry for crypto businesses is a trendy, new, and important aspect of the crypto world. However, there is still a lot of work to be done before it becomes a well-oiled machine.
There is still a lot that needs taking care of before this, even though the recent developments within the industry are showing that it is on the right path.
