There is nothing worse for cryptocurrency enthusiasts than having one’s Bitcoin balance stolen. If this involves an exchange or online wallet, there’s a chance money will be recovered eventually. In every other case, however, there is no recourse or way to get the money back.
This situation temps a few global insurers to offer protection against cryptocurrency theft. It is another positive development for the overall ecosystem. Whether or not people will effectively buy these new insurance products, remains to be seen.
It is not the first time insurers venture into the world of cryptocurrency. We have seen a few similar efforts in the past few months. However, there is no real “major traction” for these types of insurance products. A few of the world’s biggest insurers will make this bold move regardless. Offering protection against cryptocurrency is a pretty interesting development. These companies task themselves with tackling daunting challenges. How all of that will work in real life, remains a bit unclear, for the time being.
Providing Insurance in the Cryptocurrency Ecosystem
A few companies already actively provide these new insurance products. Names such as XL Caitin and Mitsui Sumitomo Insurance do not have an international ring to them. Other service providers around the world are also looking into this business model. For now, it appears the big focus is on offering such protection for companies. This mainly indicates exchanges and trading providers will benefit from these new solutions. The average consumer, on the other hand, may not see any major effort in this regard for the time being.
Considering how cryptocurrency is largely unregulated, an insurance product can be pretty interesting. Even though it will not apply to consumers, this is a very peculiar development. If this market were to take off in the coming years, things will get very interesting. This news comes on the heels of the massive Coincheck hack which occurred last week. It was another strong reminder of how cryptocurrency exchanges are not immune to hacking whatsoever. It is the price users pay for relying on centralized trading platforms.
This new industry is not without major challenges for insurers either. Providing cryptocurrency insurance comes with many different challenges. Covering the risks for customers they know next to nothing about is one of the biggest challenges. There will be a very steep learning curve for all parties involved. Most of the insurance providers work based on their own knowledge of the cryptocurrency ecosystem. Only time will tell if that is sufficient to protect their future clients.
