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The cryptocurrency market is a volatile one. While there are plenty of opportunities for making money, there are also risks involved. Have you heard about the recent meltdown of LUNA and FTX? Many investors have been caught off guard by the sudden plunges in value of various tokens and cryptocurrencies. Even those who are wary about leaving their investments unsupervised can find themselves on the losing side of things at times. Crypto insurance is a type of insurance policy designed specifically for individuals who invest in digital currencies like bitcoin or ether. It’s not as common as general business insurance, which makes sense given that the crypto market is still in its infancy stages. However, it’s worth your while to learn more about this type of policy so you can safeguard your own investments and future earnings if you plan on sticking with crypto for the long haul.
What is Crypto Insurance?
Crypto insurance is a special type of insurance policy designed specifically for individuals who invest in digital currencies like bitcoin or ether. It’s not as common as general business insurance, which makes sense given that the crypto market is still in its infancy stages. However, it’s worth your while to learn more about this type of policy so you can safeguard your own investments and future earnings if you plan on sticking with crypto for the long haul. Crypto insurance works similarly to general insurance in a few ways. First, you’ll need to pay a premium to your insurer on a regular basis. This amount will vary based on your individual insurance policy. Additionally, you’ll need to submit proof of ownership of your assets as part of the application process.
1. Protect Your Assets
One of the best reasons to invest in crypto insurance is to protect your digital assets. It’s important to remember that, unlike traditional investments, cryptocurrencies are not regulated by the government. This means that you are responsible for keeping your crypto assets safe. If you leave your funds on an exchange, you do not have direct control over them. You can’t take them out and put them in a safe deposit box. If something goes wrong – such as a hack or an administrative error – there is a chance that they’ll be lost forever. If you own insurance on your crypto assets, you can collect the funds necessary to purchase a new investment. This way, you won’t be starting over from scratch. You’ll be able to make up for the losses and still maintain a diversified portfolio.
2. Avoid Loss of Profit Due to Exchange Hack or Scam
Another reason to invest in crypto insurance is to avoid losing out on profit due to exchange hack or scam. Some exchanges are not what they appear to be. They are not regulated, they are not transparent and they have proven to be vulnerable to hackers over and over again. You may have already heard about the Japanese exchange Coincheck. It was hacked in January of 2019, resulting in a loss of $532 million. If you had invested in crypto on that exchange through a third-party broker, you would be out of luck. You’d have no way to recover your funds. If you had invested in crypto insurance, though, you would be able to recoup your losses and receive a payout for your stolen funds. When investing in crypto, especially through an organization like an exchange, you want to make sure it is properly insured. This way, you’ll know that if something does go wrong, you’ll be taken care of.
3. Hedge Against Losses Caused by Events Outside Your Control
Another reason to invest in crypto insurance is to hedge against losses caused by events outside your control. When you invest in the stock market, you are taking on a certain level of risk. Crypto, though, is riskier than traditional markets. While you don’t want to be overly conservative when it comes to your investments, you also don’t want to be too reckless and end up losing everything. If you have a good general insurance policy on your crypto assets, you can get financially compensated if there is a natural disaster near your place of residence. If a hurricane or a flood wipes out your home and your computer, you can collect the funds necessary to purchase a new computer and replace the lost data. If you have a general insurance policy, you’ll be able to receive compensation for any crypto losses caused by events outside your control. This way, you can protect your crypto investments from unforeseen circumstances and end up with a nice profit, even if most of the crypto market takes a dip.
4. Cover the Losses Caused by Orphaned Block Chain
Another reason to consider investing in crypto insurance is to cover the losses caused by orphe blocked chain. If you own a specific token, you may be concerned about what will happen to it if that blockchain becomes orphaned or unoperational. This can happen if the owners of the blockchain decide to shut down operations, or if there is a major hack. If this were to happen to your particular token, you could be in trouble. If the blockchain is no longer operational, the value of your tokens will drop. If there is no way to retrieve them, you will have lost significant sums of money. If you invest in crypto insurance, you can file a claim and receive a payout for your losses.
5. Conclusion
All in all, there are many reasons to invest in crypto insurance. When you do, you’re protecting yourself from major losses, such as the loss of profit from a hack or an administrative error, or the loss of your crypto assets due to a natural disaster in your region. You can also hedge against losses caused by events outside your control and cover the losses caused by orphe blocked chain. No matter what type of crypto investor you are, crypto insurance is worth looking into.
