Cryptocurrency market has gained massive traction in the past few years. With constant tweets from popular personalities such as Elon Musk, the crypto market is attracting the attention of other industrial markets too.
One of the markets that are looking at crypto currency market with high value is the insurance sector. Insurance companies are taking a keen interest in cryptocurrency. Several big players in the insurance sector are trying to develop new insurance policies for the crypto-currency market. Each policy will try to provide coverage to cryptocurrency investors.
Cryptocurrency Market: Why Does It Need Insurance?
Yes, it is true that the crypto market doesn’t bring too much revenue to the insurance sector. For example, the largest cryptocurrency exchange Coinbase has only 2% of its coins insured by the Llyod’s of London. Rest of the coins are either connected to the Internet or the status is unknown. This makes it difficult for insurance companies to get too much revenue by insuring cryptocurrency.
However, insurance for cryptocurrency becomes imminent if you consider the volatile nature of the crypto-currency market. There have been several instances where digital wallets of cryptocurrency exchanges were hacked, and coins worth millions were stolen. This resulted in massive losses to cryptocurrency investors and traders.
To ensure the best interests of these traders, cryptocurrency insurance becomes important. In case of theft, exchanges can reimburse the lost amount and stand back up in the market.
Since, cryptocurrency market is so vulnerable, the mainstream media hasn’t accepted it easily. Insurance for cryptocurrency brings more credibility to the market. It also helps traders trust cryptocurrency exchanges more easily and thus invest in the market.
Insurance to cryptocurrency will also help mitigate risks and assess any potential risks associated with the market. Insurance also ensures that the crypto market gets the features of multi-signature wallets, cold storage, and server-side security.
The Crypto Market As A Source of Revenue
Currently, the market insures a few percent of their coins with insurance companies. However, in the future, the crypto currency market can become a potential source of revenue for insurance companies. It is estimated that most cryptocurrency companies, start-ups, and exchanges will look for coverage from theft, crime, and cybercrime. However, hacks won’t be included in these policies.
Future predictions suggest that the annual premium for theft coverage can reach up to $10 million. This is certainly a huge sum for insurance companies.
Final Takeaway
The cryptocurrency market has massive potential to become a source of revenue for insurance sectors. Insurance coverage will make the market more credible to the mainstream media along with more benefits.
Insurance companies are working hard to develop coverage policies for the cryptocurrency market. How do these coverage plans turn out, that remains to be seen!
For more such news, insights, developments in the cryptocurrency markets, keep reading Coin Informer!
