Increasing Acute Need for Crypto-native Insurance
Traditional insurance can’t protect our bitcoin assets, so we’ll have to do it ourselves in a decentralized way. Since ancient times, the insurance business has been a big part of a lot of important technological advances. It’s unlikely that the Industrial Revolution and the start of modern insurance happened at the same time by chance. Are you ready to start trading Bitcoin? We believe it is time to capitalize on the revolution that is taking place all around you. For the best trading platform, go to the bitcoin circuit website .
Since the beginning of the first technological revolution and through all of the others that followed, insurance has been a safety net for VR inventors and investors as well as an independent, objective way to measure risk. So, it has given me the drive and sense of safety I need to try new things and get past obstacles with confidence.
We’re in the middle of a new digital financial revolution, which makes the case for using this new technology very strong. “Ensuring Responsible Development of Digital Assets,” the latest White House directive, made this argument clearer and marked a turning point for the industry. It made people think about how important the technology was on a national level and showed how important it was to the United States’ strategy, interests, and ability to compete in the world.
But since the current capacity for crypto insurance is only about $6 billion, which is a drop in the bucket for an asset class with a market value of more than $2 trillion, it’s clear that the insurance business isn’t keeping up and isn’t doing its main jobs.
During the House Financial Services Committee’s December hearings on the state of the market, the worrying lack of insurance protection for digital assets came up many times. If nothing changes, it may be harder in the future to come up with and accept new ideas and ways to do things.
Why haven’t traditional insurance companies entered this market, when it’s clear that there’s a need and a lot of potentials?
Traditional insurers have a hard time dealing with the new kind of risk that cryptocurrencies pose. This is because they have trouble with the basics. People don’t know how to use this hard-to-understand technology. This is what’s going wrong. Even if you know how to do something in theory, it may be hard for you to actually do it.
For example, it might be hard to put into the right categories new and complicated risk categories like those related to hot, cold, and warm wallets and the many technical, commercial, and operational factors that affect each of these. Because the market changes so quickly, things are getting worse. The best example of this is when new risk classes, like nonfungible tokens, show up all of a sudden. This makes a tough situation even tougher (NFT).
And of course, many insurance companies are still hurting from the damage they did to themselves when they rushed to make cybersecurity policies at the start of the dot-com boom without fully understanding the risks or the huge losses that would follow.
Use the same method to keep your crypto assets from going away. Due to the high level of multidisciplinary expert evaluation and compliance requirements in the underwriting process, items kept in covered wallets are not only safe, but they are also much less likely to get lost in the first place.
Everyone should understand why crypto asset insurance is important and how to use it. But the way things are right now, it’s clear that traditional insurance probably won’t be able to solve the crypto asset risk problem in a reasonable amount of time.
Instead, you need to look at the problem from the inside to figure out how to fix it. We want crypto-native solutions that are flexible enough to handle the full range of crypto-asset risks, commodities, and services, like NFTs, the decentralized finance protocol, and infrastructure.
After everything that’s happened, what’s stopping people from making native crypto-based insurance solutions to fix the problem?
Ironically, most of the investments made by the crypto asset insurance industry are in the same crypto projects whose future success would suffer if they didn’t get involved in this field. This is a strange decision since the long-term growth of these cryptocurrency projects would be slowed down by a lack of investment in this area.
There is no doubt that we are in the middle of a new technological revolution right now. This is true because insurance has been a key part of making the most of past tech revolutions. At the moment, crypto-assets don’t have much protection from risk, which is bad and can’t last. The Bitcoin community needs to realize that the way things are right now is a problem since there aren’t many ways to keep coins safe.