Can crypto Insurance be a next big thing?

[Youghoor]

Crypto crime rate has increased significantly. An article in Cointelegraph stated that criminals have stolen around $4.5B worth of digital currency in the first half of 2019 alone.^[1]
"The growth in popularity of cryptocurrencies has, in many ways, outpaced the infrastructure built to support it." ^[2]
Exchanges which control most of the trading volume and also act as a storage place for cryptocurrency have become an easy target of hackers. So, could insurance be a promising sector in cryptocurrency or there are drawbacks to it? What could be the challenges for both the insurer and the insured?

^[1]https://cointelegraph.com/news/cyber-criminals-netted-43b-from-crypto-related-crime-in-2019-study
^[2]https://cointelegraph.com/news/crypto-insurance-a-promising-sector-despite-caution-of-major-players

looking at the current state of the crypto space, crypto insurance can not really make any significant change or reduce crypto crime. It will be very difficult for an insurance project or platform to restore stolen cryptocurrencies. most of these situation  involve huge amount of funds being stolen and restore or repaying back such funds is not gonna be easy. The best thing that can be done to reduce crypto crime is an improvement of the security nature of exchange platforms and crypto wallet..

Well, you have a point there but I don't think you really understand the point and suggestion of this post. This post was to find out if having crypto insurance projects in the crypto space will be the next big project.  You should recheck the post and try to get what the post meant..

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[Moiyah]

There are much insurance for cryptocurrency that are coming up today, because of so many scams and hacking events I think insurance has a vital rule in the industry of btc and altcoins. The challenge for the insurer is the absence of past information and data, that is one of problem that the insurer hard to figure it out. Few percentage of crypto trading and exchanges are insured today, still a lot more crypto businesses are not. When trading industry will think about the instability of the cryptocurencies ecosystem then they should put their coins insured. That is why insurance in cryptocurrency is one big craze.

[Kyraishi]

It's difficult to insure an asset that isn't really real in terms of actually being able to see it or feel it. I think this is the problem with crypto and what people perceive of it. If they cant see it, they won't trust it. My opinion anyway. I am all for it, but this is how I think other people would perceive it.

That's pretty accurate to what's happening, it's really hard to secure crypto assets because it's a lot different to a car or a house, where it'll be pretty easy to find out if it burnt down by the owner for insurance, whilst you can easily fake getting hacked online.

Crypto crime rate has increased significantly. An article in Cointelegraph stated that criminals have stolen around $4.5B worth of digital currency in the first half of 2019 alone.^[1]
"The growth in popularity of cryptocurrencies has, in many ways, outpaced the infrastructure built to support it." ^[2]
Exchanges which control most of the trading volume and also act as a storage place for cryptocurrency have become an easy target of hackers. So, could insurance be a promising sector in cryptocurrency or there are drawbacks to it? What could be the challenges for both the insurer and the insured?

^[1]https://cointelegraph.com/news/cyber-criminals-netted-43b-from-crypto-related-crime-in-2019-study
^[2]https://cointelegraph.com/news/crypto-insurance-a-promising-sector-despite-caution-of-major-players

I doubt it when it comes to hosted wallets. Bitcoin is based on the notion of decentralisation, and even with insurance, I doubt that people would trust online hosted wallets for that exact reason - it takes away from the decentralised nature of bitcoin wallets.

Thus, I don't think that such an insurance product for depositor balances would ever take off. I doubt that there would be a lot of providers for the insurance either since there is no guarantee that the service itself wouldn't go rogue and fake a hack to claim insurance money, etc. with the untraceability of the blockchain.

When it comes to price hedges, though, such a product could be mainstream. But then, you've already got perpetual futures and options that people can buy on the derivatives market to insure themselves against adverse price movements.

I don't think there's such a world where we'll see insurance for a decentralized product like BTC. There could be a world where price hedges are a thing, but it does seem pretty useless and is very niche for a business.

[Jet Cash]

It might be worth considering the storage and insurance of crypto in ration to gold. This company offers a service for gold investors. You will see that it requires the owner to deposit his gold in their vaults.
https://www.bullionrock.com/bullion-guide/storage-and-insurance
Similar services are being created at the moment for funds that have over $1,000,000 in Bitcoin, but they require the owner to leave the coins in the insurer's wallet. This will reduce the use of Bitcoin for daily transaction, and transfers the real ownership of the coins away from the investor.

[coin-investor]

It's difficult to insure an asset that isn't really real in terms of actually being able to see it or feel it. I think this is the problem with crypto and what people perceive of it. If they cant see it, they won't trust it. My opinion anyway. I am all for it, but this is how I think other people would perceive it.

What do you mean they can't see it, we all can see it, we can see the transaction hash the funds and the balance, even if it is online it still has an entity, but I agree there should be guidelines when it comes to insuring a Cryptocurrency or a third party insurer besides being insured by the exchange, but if I am a company I have to check my option if I can really ensure that large amount somethings hackers are hacking millions of dollars

[Mandoy]

With the increasing number of hacking victims and the number of people with huge losses because of volatility it is really tempting to avail of crypto insurance. But insurance companies in reality are also avoiding huge risk since cryptocurrency really is very risky I guess the insurance companies will not enter into this business. But if it will really occur that a certain insurance company will be dealing with crypto then it will be a big hit especially for big traders and exchanges.

[lobat999]

To tell the truth, I loved the 'crypto insurance' idea. Insuring cryptos we all own will secure our digital money and we will be more relieved when our crypto is gone. But of course, there will be limitations and insurance policy won't recover our digital money for all reasons.

Of course! I think everybody wants their funds being safe all the time! and in fact, I think even users of  large exchanges such Binance and Coinbase had in one way the other been benefiting from insurance policies acquired by both of these entities. Aside from a regular insurance, Binance did another wonderful program to further safeguard its customers funds with Binance SAFU to augment the coverage of its regular insurance policies.

In this aspect, I think we can deduce that our funds are more safer in these two exchanges compared to others who don't have yet insurance coverage and most people value this kinds of things that would most likely give them peace of mind regarding their funds security with custodial wallets as with the case of exchanges.

[AjithBtc]

The possibility for such a insurance service is quite a complex thing, because when there is some crime or hack takes place through insurance one can get back the funds. Same time these funds can be send by the respective person to known person and claim it a hack for the insurance funds. Only thing maybe the present insurance firms can accept bitcoin and other cryptocurrencies as premium.

[mazdafunsun]

Insurance companies make their insurance policies based on risk evualtion,
They have people who work on mathematical models and try to get as much information about the cases when they have to pay out.

I doubt that there is enough information for insurance companies to use for their analytics to justify their policies and cost of insurance. Also they crypto value chnages all the time, how would they include that in their policy..

[alexsandria]

I don't know, I cannot imagine how would that look like. Is it will just like a bank but online and the involved money is in crypto? Also, there would be many problems in terms of legality since majority of countries still didn't recognized bitcoin and some even are against it. Companies will be also a deciding factor here since some like banks will try to stop it because they see it as a competitor. I don't know.

[Little_king]

insurance is good in everything which give second thought of chance by give a risk management in place and having your funds save in case of stolen or hack, and that is a new way blockchain need to take step on which i believe will make crypo boom for more adoption .

[CryptoBry]

I was talking about this thing last month to a friend of mine who is also into cryptocurrency. There is a big need for different cryptocurrency exchanges to apply for insurance so that in case of a successful hacking and other specified misfortune the exchange will have funds to cover what was lost and can assure their customers that the risks are already covered. Of course, the insurer has to laid down the many legal parameters for the insurance like what can be covered and how to make sure that there are no frauds involved. I am not sure if we ordinary holders of cryptocurrency will soon be able to get insurance for our holdings but this is quite possible as insurance business is really all about allying possible risks in the course of doing business and again it is all up to the insurer to set up the guidelines to follow by both parties involved. I am sure that big insurers are already eyeing on how they can do big business in the era of cryptocurrency and digitalization and soon we can see how developments are taking place in this emerging industry.

[timerland]

I was talking about this thing last month to a friend of mine who is also into cryptocurrency. There is a big need for different cryptocurrency exchanges to apply for insurance so that in case of a successful hacking and other specified misfortune the exchange will have funds to cover what was lost and can assure their customers that the risks are already covered. Of course, the insurer has to laid down the many legal parameters for the insurance like what can be covered and how to make sure that there are no frauds involved. I am not sure if we ordinary holders of cryptocurrency will soon be able to get insurance for our holdings but this is quite possible as insurance business is really all about allying possible risks in the course of doing business and again it is all up to the insurer to set up the guidelines to follow by both parties involved. I am sure that big insurers are already eyeing on how they can do big business in the era of cryptocurrency and digitalization and soon we can see how developments are taking place in this emerging industry.

There's a need for exchanges to protect user funds, not purchase insurance or do what else to make sure they don't lose money. An exchange or bank should be held responsible for your money and they need to be made sure they are impenetrable otherwise the rule of keeping your funds in your own hardware will never change.

Also, no buisness would ever be willing to pay out millions in a hack, unless the exchange would be paying huge fees, and the exchange won't want to do that.

Something needs to change for sure though.

[Apes]

who wants insurance services, as a private user, I would reject it. it is the obligation of the exchange market owners to insure their consumer assets. in my opinion, rather than insuring assets, it is better to increase security periodically.  because if there is no infrastructure improvement, I'm sure if there is theft the insurance will not cover compensation.

[veleten]

I was talking about this thing last month to a friend of mine who is also into cryptocurrency. There is a big need for different cryptocurrency exchanges to apply for insurance so that in case of a successful hacking and other specified misfortune the exchange will have funds to cover what was lost and can assure their customers that the risks are already covered. Of course, the insurer has to laid down the many legal parameters for the insurance like what can be covered and how to make sure that there are no frauds involved. I am not sure if we ordinary holders of cryptocurrency will soon be able to get insurance for our holdings but this is quite possible as insurance business is really all about allying possible risks in the course of doing business and again it is all up to the insurer to set up the guidelines to follow by both parties involved. I am sure that big insurers are already eyeing on how they can do big business in the era of cryptocurrency and digitalization and soon we can see how developments are taking place in this emerging industry.

There's a need for exchanges to protect user funds, not purchase insurance or do what else to make sure they don't lose money. An exchange or bank should be held responsible for your money and they need to be made sure they are impenetrable otherwise the rule of keeping your funds in your own hardware will never change.

Also, no buisness would ever be willing to pay out millions in a hack, unless the exchange would be paying huge fees, and the exchange won't want to do that.

Something needs to change for sure though.

I still do not understand how do you plan to execute the said insurance even if it is legally be possible
for it to protect you there must be a legal mechanism in place based on which the companies that insure you work
you cannot create something that is not regulated and have it deal with the finances
thats one thing , lets assume you got all of the licenses and permissions for your insurance business
how do you determine the validity of the claim , the transactions are irreversible , you'd get swamped with fake claims and won't be able to neither return the funds nor find out who stole it
or if it was a theft or it was done to cheat you out of the insurance money by transferring coins to another wallet etc.

[blckhawk]

Crypto crime rate has increased significantly. An article in Cointelegraph stated that criminals have stolen around $4.5B worth of digital currency in the first half of 2019 alone.^[1]
"The growth in popularity of cryptocurrencies has, in many ways, outpaced the infrastructure built to support it." ^[2]
Exchanges which control most of the trading volume and also act as a storage place for cryptocurrency have become an easy target of hackers. So, could insurance be a promising sector in cryptocurrency or there are drawbacks to it? What could be the challenges for both the insurer and the insured?

^[1]https://cointelegraph.com/news/cyber-criminals-netted-43b-from-crypto-related-crime-in-2019-study
^[2]https://cointelegraph.com/news/crypto-insurance-a-promising-sector-despite-caution-of-major-players

I personally think that a regulatory commision is a much better option than this insurance companies. A regulatory board with integration to the government to enforce policies and laws regarding crypto, but won't go as far as controlling the market. The market should still be decentralized without control from the government. Their job will only be to distribute permits to operate for companies that want to engage or establish crypto-related projects.

[Eugenar]

One thing I know for sure that an insurance will get the best out of crypto is the hope that it can provide. Let's take for example, if a person is alive and he/she took a death insurance using cryptocurrency such as bitcoin, whether the value of bitcoin isn't enough whenever he/she dies, the insurance company will just need to wait further time for the value of bitcoin to rise. So, the family of the deceased need not to worry about paying debts. Though, what we should consider the most is having an insurance pertaining to health. Quite weird to plan for our death while we're still alive.

[#dhabitamartha]

I am very happy as a bitcoin user, this is a good solution to worry about losing bitcoin and this will make it more convenient for investors to invest more money.

[Ridwan Fauzi]

There is some exchange who has done it recently, such as binance exchange who has gave an insurance to their member when the exchange had hacked a few months back. Yeah, I'll agree with this concept and I believe there will be many people who get an interest to it especially for newcomers.

So as they will comfortable to run each investment that they choose on cryptosphere. Because most cryptoc exchanges are centralized, which is mean there is some party who manage their money and it is not wrong to convey what is desired by the user and the exchange's team must warrant to their wanted.

[bounceback]

if I see it now there is no insurance in cryptocurrency to eradicate cryptocurrency hackers then that is the first risk for people who use cryptocurrency as a payment method to buy trading goods and also very risky for investors who invest with other cryptocurrency so that for us cryptocurrency users are very careful careful in maintaining privacy for our own security so there is no hacking.