Cryptocurrency scams and hacks have been all over the tabloids lately. More people are losing money to crypto-related fraud, day by day. The estimated dollar worth of crypto lost by June 2022 is over $1.7 billion.
Crypto insurance is the shield investors need against any losses associated with crypto scams and cyber attacks. Most exchanges like Coinbase, Binance, etc., already have some insurance to protect the digital assets they hold for their customers. In this week’s column, we dive into crypto-insurance and explain the types of insurance available for your digital assets.
Because cryptocurrency isn’t a legal tender, crypto insurance isn’t the same as the insurance you may get for your stocks, bonds, or other bank accounts. There’s no reason why digital assets should not have insurance like any other valuable physical item. Cybersecurity breaches are prevalent in a digital environment, but with sufficient safeguards, one may protect themselves from such situations.
Crypto insurances can only cover hacks or crypto thefts. It is designed to cover institutional losses but can’t insure you if you fall trapped in a Ponzi scheme that promises high returns with no risks. The crypto insurance policy doesn’t cover direct hardware loss, damage, and cryptocurrency transfer to a third party.
Why You Need Crypto-Insurance
Cybercriminals are now taking advantage of the current cryptocurrency craze to deceive potential victims and steal their digital currency. In 2021, hackers exploited vulnerabilities in cryptocurrency platforms, stealing approximately $3.2 billion in cryptocurrency from victims.
The increased number of hacks has produced a sense of anxiety among investors, necessitating the demand for crypto insurance. Since the beginning of 2021, over 46,000 consumers have reported losing over $1 billion in cryptocurrency scams and hacks, according to the FTC.
Hackers stole $613 million in digital tokens from platform Poly Network in August 2021, making it one of the largest cryptocurrency heists ever. This is just one example; countless others have been reported in recent years. According to the survey, nearly half of those who lost digital currency in a scam indicated the scam began with an ad, post, or message on a social media platform.
Buying cryptocurrency insurance
As the industry becomes more aware of the necessity for individual crypto coverage, hacking, phishing, malware, device theft, trojan software, and brute force attacks are all covered by Coincover. The company has an individual protection plan that ranges from $10 to $750 covering losses beyond what exchanges might typically include.
Cryptocurrency has the potential to become popular, and as a result, regulatory frameworks are likely to emerge. The insurance covers everything from cybercrime to identity theft to custodial wallet insurance. Most crypto-insurance providers that exist today do not directly target consumers.
The cryptocurrency insurance market in Kenya is poised to become a significant opportunity keeping in mind that there is a long way ahead for the crypto market to become completely stabilized. The crypto insurance market in Kenya is poised to become a significant opportunity. Like in anything else where you regularly pay small amounts of money to protect yourself from a huge loss, crypto insurance will see mass adoption if the risk vs reward equation is well-calibrated.