Since Bitcoin’s creation, there have been 60 exchange hacks that have stolen more than $75 billion worth of crypto. How can one protect oneself from such a loss? What opportunities does the market currently offer?
Fortunately, corporate insurance has been around for a long time. Much like how accident insurance works (where you might want to get the cheapest SR22 Bond you can find), if your exchange loses money due to a hack, it (and hopefully you) will be compensated. However, the situation is different for private individuals. Since cryptocurrencies are not legal tender or traditional assets, they are not secured in the same way as cryptocurrencies.
Crypto Shield recently launched insurance that compensates crypto owners for a loss of assets on popular crypto exchanges such as Binance, Coinbase, and Gemini. An important caveat applies: Only qualified crypto product providers are insured. So if you want to insure your Ledger or Trezor wallet, you can’t do that withCryptoShield. However, there are already providers who specialize in cold wallets. More on that later.
Crypto insurance for retail investors
Crypto According to the developers, Shield is said to be the first insurance product on the market designed specifically for retail wallets. “It’s designed specifically for those who are involved with crypto but don’t have institutional accounts,” said Alex Maffeo, CEO, and founder of Boost Insurance.
The insurance covers 20 different cryptocurrencies, including Bitcoin, Ethereum, Ripple, Solana, and Dogecoin, as well as stablecoins such as Tether or the USD Coin. A value of up to one million US dollars can be insured. According to Boost Insurance, larger sums fall into the category of “institutional investor”.
Maffeo went on to explain, “We’re really trying to appeal to retail investors, from those who are just starting out with crypto to individuals who own up to $1 million.”
The insurer offers a dashboard that you can use to update and manage your insurance account. The insurance also covers an increase in value of up to 50%. In addition, insurance also applies to new investments. You can invest up to 150% of the current value of your coins. However, you cannot pay the insurance premium in crypto.
Exchange hacks are relatively rare. Nevertheless, there were 6 officially reported hacks last year alone, in which crypto worth almost 4 billion US dollars were lost. That’s why insurance could be worthwhile. But what about insurance for hardware wallets or offline wallets (“cold wallets”) if you don’t want to keep your coins on an exchange?
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Cold wallet insurance is in the works
Evertas, a Chicago-based insurance platform, received approval this month to call itself a “coverholder” at Lloyds of London, one of the world’s leading insurance providers.
Coverholders are specialized, Lloyd’s approved insurance providers that offer policies for niche areas. Evertas is the first cover holder of its kind to specialize in cryptocurrency insurance, namely digital wallets. The insurance of cold wallets is also on the company’s agenda. However, it will still be some time before the company launches insurance for these.
According to Evertas, of all crypto assets that have a total market value of around $2 trillion, only 0.25% are insured. So the crypto insurance market is pretty big. As adaptation progresses, the crypto insurance market will continue to grow and new crypto insurance providers will appear on the market. Whether cold wallet or exchange insurance: The possibilities and potential of the crypto insurance market are far from exhausted and the market is ripe for new products.