Cryptocurrencies like Bitcoin could end up being the next big wave into the technological future. More and more companies are starting to use and accept cryptocurrencies through their payment systems. They are being considered a valid way to be used as currency.
Cryptocurrencies are still a new type of technology however, they have the potential for serious risk according to some analysts and error is always prevalent. Cryptocurrencies are typically backed by different types of blockchains.
A blockchain is designed to make things more secure and reduce the risk of fraud from occurring. As with anything, there is a certain amount of risk happening. Even though risk is still prevalent, people are still using the currency and making big moves with some like Bitcoin. That is the reason that we are now starting to see emerging companies focused around creating Bitcoin Insurance. Basically, since cryptocurrency is a risky business, insurance is naturally going to follow risk.
An example of where insurance is important in the realm of Bitcoin is with the Mt. Gox Scandal. There is speculation that they took bitcoin insiders from the exchange. And the ensuing loss looked to be more than $400 million dollars.
There was also traditionally no way to insure theses type of losses, coverage was something that simply couldn’t be found. The risk for cryptocurrency fraud and risks was great.
Traditionally, they tried to find coverage but could only find untrustworthy, constructions and provisions with insurance policies that were novel at best and extant. Now certain insurance companies are starting to take the bull by the horns and marketing a new type of product.
The product is simply called cryptocurrency insurance.
Newly Available Cryptocurrency Coverage
In 2014, the Great American Insurance Company started to offer users insurance on the Bitcoin for the first time. It was primarily for businesses and not for individuals. Their main focus was endorsing the policies for existing crimes and customers who accepted Bitcoin for further insurance into crimes. The Great American Policy even went so far as to cover employee Dishonesty. It also covered computer fraud and money and securities forgery. There were even endorsements for other coverages needed as well.
Additionally, cryptocurrency coverage also has options that came to fruition in 2015. It even included Bitcoin Financial Group. The LLC started to also offer different types of insurance products for customers who were insured. The specially developed insurance service was known as BitSecure. The coverage was unique to the needs of each insured individual. Speaking frankly though, they offered secure coverage that was much greater than that offered by the Great American Insurance companies crime coverage.
Insurance is also being offered by other companies now like Coinbase Incorporated. Also, Elliptic Enterprise Ltd for the purpose of bitcoin storage. The policies are being developed with a nearly limited spectrum however. The specific coverage will vary depending on the company offering it. Generally speaking the policies will help protect companies from theft and losses occurring in regard to errors in technology the companies use for whatever services they provide.
And that was just the beginning of cryptocurrency insurance. In November of 2016, Mitsui Sumitomo Insurance started to offer cryptocurrency insurance for cryptocurrency exchanges. The policy for Mitsui covered losses related to external and internal threats and risks, or causes. So, if there was theft directly from employees, cyber hackers or other outside parties, and unauthorized access as well as mistakes, Mitsui would cover it. Mitsui even gave consulting to individuals who were insured to help them keep security measures tight.
They would help them setup and keep security maintain the appropriate level of needed security. The policy was developed by the largest exchange in Japan, bitFlyer. They are now the sixth highest-by-volume bitcoin exchange in the world. This sets Japan’s involvement and endorsement into Bitcoin in place as well as their involvement into other cryptocurrencies. As of April, Japan now officially accepts Bitcoin as a legal payment method and currency.
Although others will argue, cryptocurrency looks to be here for good, at least for the future in the next 5-10 years. The risks that are associated with Bitcoin also seem to be here to stay as well. And any company that is dealing with cryptocurrencies on a regular basis would be smart to look into getting some type of insurance like the ones in this article.
It would be a much smarter move than counting on existing policies covering any threats or risks. As use of cryptocurrencies keeps occurring and becomes more spread out on a global basis, companies would be wise to start using insurance products. This would be smart even if they didn’t look at themselves as a tech company. Any new technology can potentially create a ripple effect across a multitude of different industries.