The meteoric rise of cryptocurrency prices intensifies the need for tenacious security for this digital asset. From massive thefts of crypto wallets to a large number of hacks and mobile phishing, the cryptocurrency market opens arms to the insurance industry for a useful purpose.
Investors are finally mutually accepting the need for insurance in cryptocurrency, which would serve as a protection for their coins regardless of their use. Before this thought, every measure counted for the purpose of safety of this digital asset failed miserably, demanding more effective protection like Bitcoin Equalizer. That’s where insurance comes into the picture.
Trend of Insurance in Cryptocurrency:
As with other physical assets, insurance will now also be incorporated in cryptocurrencies allowing third-party interference. However, it is still not confirmed if insurance in cryptocurrency is a promising solution to cryptocurrency or will end up going in vain like others.
The instability of cryptocurrency can now finally be observed after its various price fluctuations, taxation rules, and unexpected losses. To overcome this stability, insurance in cryptocurrency contributes its part in making cryptocurrency secure and decreasing the likelihood of major issues.
Being a relatively new trend, investors are quite confused about this security’s efficiency in the cryptocurrency market as other real assets. Therefore, we have included all the major details about insurance in cryptocurrency and if you can buy insurance in cryptocurrency too.
Why does cryptocurrency need insurance?
The popular cryptocurrency bandwagon is making rounds in the financial market after its recent price spikes, making the famous record of the trillion-dollar capitalization of Bitcoin. From individuals, startups, companies to huge crypto industries, approximately 40 million people are today finding feet in the cryptocurrency market to gain financial independence. This extensive use of cryptocurrency surely calls for a high level of security that can guarantee cryptocurrency as a secure investment.
Unlike any ordinary investment, cryptocurrency is multiple times bigger than any market that came into existence yet. Not only is it limited to making transactions, but it also generates a handsome amount of money/profit to investors through various ways.
However, the instability of the cryptocurrency ecosystem cannot be ignored at any cost, considering cryptocurrency a big market. Investors have finally realized the volatility of cryptocurrency, resulting in its skyrocketing values sometimes and massive scams most of the time. No matter how many security options you select while storing your cryptocurrency in a wallet, there’s still room for mishaps to happen.
One of the most surprising incidents in the history of cryptocurrency was the theft of more than $500 million worth of bitcoin from a popular Japanese cryptocurrency exchange- Coincheck. It shows that the place where you consider your cryptocurrency to be the safest is actually where it’s extremely exposed to threats. The new hype of insurance in cryptocurrency spread like a fire in the woods, and the predictions of the devaluation of cryptocurrency were again in the limelight.
This vulnerability of the cryptocurrency ecosystem became a major concern for investors who already had their money staked or were planning to. To come up with a reliable solution, many exchanges offered the option of insuring cryptocurrency for a greater degree of protection officially. This solution seemed reasonable as we have been using insurance for nearly all of our life on different precious Owings.
Soon after the release of the news, the trillion-dollar bitcoin was prioritized and experimented first with insurance. The reason behind this was the high volatility of Bitcoin and the multiple risk factors associated with it.
However, bitcoin is also the ideal cryptocurrency as its creation inspires nearly all the altcoins to blockchain mechanism. Therefore, it was legitimate to insure Bitcoin and see how effective it works in risk management and complying with the expected security standards.
How does insurance in cryptocurrency work?
As said earlier, the fundamental aim of insurance in cryptocurrency is to provide the basic level of protection to this unique digital asset. Therefore, a number of popular cryptocurrency exchanges offered cryptocurrency coverage with support from insurance. These exchanges have set specific rules and regulations when it comes to offering the option of insurance in cryptocurrency.
Today, the cryptocurrency insurance market rests up to between $1 billion and has predictions to peak up to $6 billion if the demand for insurance in cryptocurrency continues to increase like this.
One thing to observe is that insurance in cryptocurrency is not associated with the government in any way as cryptocurrencies are an expensive and decentralized asset to get insured. It’s better to use an insured cryptocurrency for making payments than an insecure coin that you can lose at any time. The use of insurance in cryptocurrency will also halt the criminal activities associated with cryptocurrency. It will provide a barrier for hackers and their underlying technologies to enter into the exchanges and take control of the cryptocurrency.
On top of all, insurance of cryptocurrency will prove to be the ultimate nirvana relief for you in case of losing your precious cryptocurrency through any means. In short, insurance will allow you to make a secure backup of your cryptocurrency in case you lose your fund or get your cryptocurrency hacked.
How can you buy insurance in cryptocurrency?
A number of exchanges are educating their users about the necessary benefits of insurance in cryptocurrency. They walk you through the whole process so that you get everything right in the first place. Besides, some exchanges also offer insurance products that are specially designed as per the requirements of the client.
There are varying percentages of the interest in insurance that you have to pay monthly to exchange you buy insurance from. It starts from some hundred dollars and can reach up to a great limit depending on the features you want in your insurance. A startup is charged less fees than a public company which calls for premium insurance features for the safety of cryptocurrency.
It’s okay to be skeptical about whether to buy insurance or not. But securing cryptocurrency is not a bad idea if you rely on making profits from this amazing source of passive income.
If you’ve made up your mind about buying insurance in cryptocurrency. Then look for an exchange that offers the most diversified features at affordable rates so that you don’t have to break a bank.