With more than 6500 cryptocurrencies and with a market capitalization of $2.64 Trillion, no wonder hackers are targeting the digital currency. Most cryptocurrency exchanges provide insurance to protect against security breaches and theft of digital assets.
What is the need for cryptocurrency insurance?
Crypto crimes stole US$3.2 billion worth of cryptocurrency in 2021 alone, making it all the more imperative for crypto insurance companies to step in and provide owners of the digital currency with protection for their investments. There is a rising demand for crypto-insurance, primarily to protect against thefts by hackers. The biggest issue insurers face in this segment is laying down underwriting norms and putting a clear process in place. This is because there is a lack of well-defined regulations and detailed risk assessments based on the currency’s profile and its mechanism.
Exclusions in crypto-insurance cover
It depends on the Crypto insurance company on what their policy covers and excludes on the Crypto insurance company. Generally, crypto insurance policies do not cover hardware loss and any theft or loss when transferring to third parties. Also, it does not cover if there is any failure or disruption of the blockchain of the underlying crypto tokens.
Status of crypto insurance
It is important to note that those in the business of Cryptocurrency are mainly start-ups and exchanges. They are not big enough to provide revenue to the insurance industry yet. Coinbase, the biggest crypto exchange in North America, has insured just 2% of its coins with the Lloyds of London.
The coins are stored safely in hot storage. In other words, they are connected to the internet from different locations or disconnected from the internet, and one has no idea about their insurance status.
Crypto-insurance tokens
Many organizations are using blockchain technology to decentralize insurance funds. Investors can buy tokens representing an insurance fund and profit if the value goes up. Once the value goes down, then the investment is not insured. Failures caused due to faults in contracts and hacking are covered.
Some top insurance coins for 2022
- Nexus Mutual – It is one of the best insurances for cryptocurrency coins. It uses blockchain technology, pools fund, and pays out insurance claims through smart contracts. Investors choose which smart contracts and crypto wallets they want as insurance based on the Nexus Tokens they have.
- InSure Defi- It is among the top insurance coins with the insured crypto on its networks and gets stability against scams, thefts, hackings, and portfolio devaluations.
- Events– It is one of the first companies to specialize in cryptocurrency insurance and blockchain. It protects against online hacking and loss of private keys that allow access to crypto wallets.
Conclusion
Top insurance coins cover cryptocurrencies such as Bitcoin and Ethereum, among others. They have online wallets to protect against hacking and thefts. Choosing a reputable cryptocurrency exchange and wallet that guarantees crypto-insurance and reduces your risk as an investor in digital currency is advisable.
