To say that cryptocurrencies noted unforeseen achievements in the last year would be an understatement.
Bitcoin made its historic bull run during the last two months of the year, Ethereum helped launch hundreds of new tokens and businesses through its platform, while Ripple forged partnership after partnership with some of the most renowned organizations in the world, to name a few.
However, even in the midst of all of these positive aspects, one cannot forget about the multiple hacks that took place across various exchanges, wallet providers, and other entities belonging to the cryptocurrency world.
With a $70 million hack alone on NiceHash, the mining exchange, 2017 certainly proved to be memorable in both positive and negative perspectives.
However, while the industry simultaneously celebrates its achievements and licks its wounds from those hacks, it needs to put its affairs in order and devise a proper plan of action to protect companies and their consumers who are prone to hacking incidents even after employing the best security measures that they could.
While decentralized exchanges are in the works and would certainly work towards a long-term solution, having a contingency plan in place would not hurt these entities either.
That is what a certain sector that is expanding from the financial markets to cryptocurrency is suggesting, and it cannot be said that its proposal is anything less than interesting.
Cyber insurance to the rescue
One of the fastest growing market segments in 2017, cyber insurance capitalized on the multiple hacks that ranged from the likes of Equifax to the ones involving WannaCry.
With premiums that were already higher than other segments, cyber insurance saw such an increase in its demand that it deemed incomparable to recent years, and it then seemingly decided to expand its horizons further, starting to develop specific products that would deem to be lucrative to cryptocurrency enterprises.
It looks like cyber insurance companies are looking at cryptocurrency exchanges as premier business opportunities.
Wasn’t it already in place?
Most of the popular cryptocurrency exchanges are already associated with such providers, but the policies that are offered by these companies are now evolving further due to the risks that are associated with holding cryptocurrencies and how the holders of these assets are looking at solutions that would serve a benefit to them, even if it seems to be of slight advantage at first glance.
This particularly precarious situation and air of uncertainty have created an area of competition between these providers that include the likes of AIG, Chubb, and XL Group.
While one of them offers discounted premiums in which even a percent could mean a difference of thousands of dollars, the other one could just as easily offer a clause that provides more coverage for an added incident.
As a result, this leads to what seems like a bidding war between these providers, and while this makes the process beneficial for cryptocurrency enterprises, it would not be long before the “cryptoinsurance” industry matures enough to have policies that are set in stone, at which point it would get interesting for cryptocurrency enterprises as well.
Isn’t cryptoinsurance complicated enough in the first place?
Much like the cryptocurrency industry itself, cryptoinsurance is still in its infancy and will need time to mature. Therefore, the answer to that question would be yes.
The policies that are being offered still leave a lot to be desired. For instance, in terms of a hacking incident, it sometimes remains unclear during the first few drafts whether the claim will be filed in the cryptocurrency in which the amount was compromised, or in fiat at the day’s value (since volatility and evaluation are some of the most important factors to an insurance company).
These details are discussed and finalized before the companies enter into an agreement, but this is just an example of how far the cryptoinsurance industry has to go to get everything in place from the get-go.
The purpose of covering this topic was to turn the community’s attention towards this growing market segment and how it is intending to act as an “emergency exit” when all precautionary and security measures against hacking attempts get failed.
Furthermore, it would only be logical to ask your exchange or wallet provider if they have such policies in place, as that might help you stay vigilant in securing your assets with the best possible provider.