You’ve probably heard it 1000 times—cryptocurrency is a risky business. As such, many have wondered if there is some sort of insurance they can use to protect themselves when things go wrong.
Cryptocurrency insurance does exist; however, we aren’t sure it is the best way to deal with the risk involved when investing in crypto. Keep reading to learn more about the ins and outs of cryptocurrency insurance and whether or not you should consider it for protecting your investment.
Does Cryptocurrency Insurance Exist?
You might be surprised to hear that there is such a thing as cryptocurrency insurance; in fact, there is a wide variety of options available for those who wish to protect their investment. Before you get too excited, however, let’s look into the details of what cryptocurrency insurance covers and whether or not it is worth it.
What is Cryptocurrency Insurance?
Cryptocurrency insurance, at a base level, is an insurance plan that protects cryptocurrency purchases. But the actual options for coverage actually go far beyond just covering your purchases. Rather, there are a multitude of options for those involved in mining, research, and at an institutional level.
We were honestly surprised by the large number of cryptocurrency insurance options we found available during our research, but cryptocurrency insurance doesn’t function the same way as your health insurance, though, so don’t go out and buy a policy just yet.
What Does Cryptocurrency Insurance Cover?
There are many different types of cryptocurrency insurance, and we will discuss them each briefly.
Mining Hardware
As the title indicates, this type of cryptocurrency insurance is only for miners and allows them to protect the tech they use to mine crypto. Similar to renters’ insurance, this is a specific policy with a dollar amount attached to expensive pieces of mining equipment in case of theft, loss, or damage.
Platform Failure/Digital Asset Protection
Platform failure and digital asset insurance is specifically designed for institutions and is intended to pay out if their platform is lost or damaged. We believe it includes coverage for damages caused by hackers, but each policy we reviewed was a bit different.
Crime Theft/Loss
For the average cryptocurrency investor, there is crime theft/loss insurance, which will pay out in the case that your crypto is stolen or lost. To be clear, it will not protect you in the case that you lose part of your investment due to a token declining in value—this is only if you lose access to your cryptocurrency through a fault that is not your own.
We are not 100% certain of the ins and outs of these types of policies, but they may be a good idea if you have a large amount of assets and are worried about them being stolen.
Digital Property Protection
Similar to the type of insurance you would purchase for expensive jewelry, digital property insurance is taken out for a specific digital property, such as an NFT, usually for a specific value. We aren’t sure how this works when the value of the NFT changes, but is certainly worth looking into if you own some expensive NFTs!
Who Offers Cryptocurrency Insurance?
There are numerous institutions that offer cryptocurrency insurance, though none are especially well known. Below, we listed some of the companies that you can consider for cryptocurrency insurance should you feel so inclined.
·Evertas
·CoinCover
·Canopius
·Superscript
To be clear, we have not vetted any of these cryptocurrency insurance providers. All vetting must be done on your own terms and, as always, be cautious of scams and read all the fine print before buying.
Can Anyone Buy Cryptocurrency Insurance
There are many different types of cryptocurrency insurance, but while some types are limited to institutions, theft/loss protection and digital property protection can generally be purchased by anyone. We don’t think that everyone needs to buy cryptocurrency insurance though—more on that below.
Should You Purchase Cryptocurrency Insurance?
Just because something exists doesn’t mean you need to purchase it. Especially when it is something new to the industry, like cryptocurrency insurance. In our opinion, only those who own very expensive NFTs or work with cryptocurrency on an institutional level should consider cryptocurrency insurance.
Why? Well, like we said above, cryptocurrency insurance is new to the industry, and we don’t exactly trust all the names of companies that offer it that we found during our research. At this point, we think acquiring insurance for cryptocurrency might be just as risky as holding cryptocurrency in the first place. This is especially true in countries without strict regulations governing insurance companies.
Additionally, the major risk of buying cryptocurrency isn’t theft or loss, but rather losing your investment due to market fluctuations. While, yes, there is still risk of being robbed or losing your private key, in general, you can mitigate that risk by upping security practices. You cannot mitigate the market risk.
This means that even if you buy the best insurance, you could still watch your asset lose value tomorrow. So, unless you own a very famous NFT, or a blockchain platform we recommend staying away from cryptocurrency insurance right now but maybe in the future we will reconsider. If you absolutely want cryptocurrency insurance, just be sure you proceed with absolute caution and vet the platform before buying.
Is Cryptocurrency Insurance Worth It?
In our opinion, cryptocurrency is too new to truly be worth it. While there might be some value to it for platforms and individuals holding very expensive NFTs, the average investor should skip it and rather spend their time and money ensuring they have implemented some basic security practices for keeping their crypto safe.
Overall, cryptocurrency insurance is a viable option, but it is still too new for us to recommend it at this time. Those who own a platform should absolutely insure their platform, but those investing at an individual level will likely find their money best spent elsewhere instead of directing it toward a cryptocurrency insurance policy.
This article was brought to you by the Bitcoin Dice Game on MintDice. Originally posted to MintDice.com.