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Thursday 17 February 2022

Crypto Insurance: What is it, How it Can Protect You

WebProNews
Crypto Insurance: What is it, How it Can Protect You

The rise of cryptocurrency has been breathtaking and stands at a market cap of $2.05 trillion. Crypto is incredibly dynamic, with $91.5 billion being exchanged daily. With 455 worldwide spot exchanges across 154 countries and through 120 million Bitcoin transactions, the highly-valued dough does not stop moving.

Theft of cryptocurrency is growing at an outpaced rate. Though acquirers use a number of tactics to do so, four common methods are worth looking out for. Phishing is a frequent mode, as manipulators steal $115 million annually by targeting texts, emails, and other ways of messaging. Another common route is hacking, as software systems and cryptocurrency wallets are broken into, with $7.4 million in crypto being stolen annually via hacks. Third, exploitation occurs all-too-often, as blackmail, fraud, and ransomware are pursued to steal the $103 million that’s robbed each year as a result of exploits. Lastly, Ponzi Schemes account for the stealing of over $2 billion annually as investors are fraudulently paid other investor’s stock.

Big Crypto Losses

A few large cryptocurrency acquisitions made headlines as ‘mega-losses’. In 2018, Chris Larsen, invested in XRP lost $44 billion, Mt. Gox, invested in BTC, lost $2 billion in 2013, and in 2021, Maxnaut, invested in NFTs, lost $297 thousand (USD). Often, daily totals of cryptocurrency theft are just as massive, with more than $10 million in crypto reported missing per day.

Just half of U.S. adults agree that cryptocurrency is secure enough to invest in. Reflecting this mass sentiment of mistrust, Ben Bernanke, the Former Chair of the U.S. The Federal Reserve said, “[cryptocurrencies] may hold long-term promise, particularly if the innovation promotes a faster, more secure and more efficient payment system”. Echoing this idea of needing more security to promote the innovativeness of cryptocurrency, Charlie Brooks, founder of Crypto Asset Recovery, said, “to your average retail investor, the crypto and DeFi world is full of opportunities but fraught in insecurity by the lack of a safety net in the way of a centralized entity controlling their login details and securing their assets”. As the cryptocurrency industry continues to evolve, improving security should be held a top priority.

The Rise of Cryptocurrency Insurance

Cryptocurrency insurance is an emerging trend. Having reached $3 billion, the crypto insurance industry is booming. An alluring perk that this form of insurance offers is malleable limits that cater to your needs and portions of investments. Another is commercial insurance for business, extending crypto insurance’s use beyond personal wallets. Lastly, defense against traditional insurance scams, theft, and harm offer a new form of protection for your assets.

Insurance via cryptocurrency and NFTs requires three steps. First, find providers and quotes. A similar consideration process, when searching for traditional insurance companies, can be pursued here, and it starts by familiarizing yourself with players in the industry. Second, start contemplating crypto insurance premiums. In this step, as coverage estimates, based on your personal financial information, will vary by provider and should drive your decision. Lastly, select your protection. Fraud insurance, business cryptocurrency insurance, custody insurance, DeFi insurance, and exchange insurance are a few of the many umbrellas you can choose to keep you covered.