Bright Prospects for Cryptocurrency Insurance
With the presence of cryptocurrencies growing due to the usage of various cryptocurrencies and crypto trading, it’s no surprise that a lot of other industries are trying to get into the bandwagon. Lately, insurance giant Allianz has announced in a Bloomberg news report that the company has become interested in creating an insurance medium for cryptocurrency. As this is something rather new, Allianz’s movement could pave way for cryptocurrency insurance to become mainstream.
Why Is Insurance Needed for Cryptocurrencies?
The thing about the cryptocurrency market is that it is still rather small since it is made out up just tech startups, tech enthusiasts, and investors. However, these participants have been exposed to the unstable nature of cryptocurrencies with it being pretty new and all. In fact, cryptocurrencies are quite vulnerable to theft on the internet. Take the example of the big Coincheck hack where a lot of cryptos were stolen. Another example would be from those who do Bitmex trading and part of the Bitmex Telegram Group in the popular platform Bitmex. A number of users have reported their accounts being hacked and their money still inside. Bitmex’s hacking incident wasn’t as big as Coincheck’s but was still enough to cause a ruckus.
Of course, the price instability and the security issues can already show you that the money of the people isn’t secured when on the web. That’s where cryptocurrency insurance comes in. With all the possible threats that investors, traders, and startups can experience, it would be great to have a blanket of insurance just in case of a whopping loss.
The Current State of Cryptocurrency Insurance
As early as February this year, there have already been a few companies that have started to offer some cryptocurrency insurance premiums. These include AIG, Chubbs, and XL Group. However, these companies haven’t gone mainstream with these service yet as the market is still very raw. They have been quietly offering these premiums to crypto startups so that these startups can be protected from hacking or theft. In fact, BitGo is one of the first tech companies to avail of these types of insurance policies.
Bringing Cryptocurrency Insurance to the Mainstream Market
As mentioned above, Allianz is also getting into the whole cryptocurrency insurance craze simply because there is a market for it. In fact, Allianz spokesperson Christian Weishuber states that:
“Digital assets are becoming more relevant, important and prevalent on the real economy and we are exploring product and coverage options in this area”
This shows that he does see the potential of cryptocurrencies to prevail as one of the main currencies on the future. This gives room for the growth of the cryptocurrency insurance premiums and may possibly allow it to go mainstream.
Of course, all of this is still yet to be seen since not many people or companies have availed of cryptocurrency insurance premiums yet due to the high cost. If the demand keeps going up though, then we may see the costs go down. With that, cryptocurrency insurance policies can be more welcomed by the market.