Cryptocurrency has changed the way people live, do business and pay for goods and services. It’s also changed the way people invest, especially when it comes to money. In fact, according to some reports, Bitcoin is said to be the fastest growing type of currency in the world today. The speed at which the value of Bitcoin has risen and fallen have become a cause for concern among investors. On a brighter note, many companies have started offering insurance against loss of investment made in Bitcoin. These insurance policies are known as cryptocurrency insurance.
In a nutshell, cryptocurrency insurance is an investment protection policy that safeguards your investments in cryptocurrency against any form of losses including theft and fraud. This is done by providing a fund that will cover any losses incurred.
Cryptocurrency insurance is a type of general insurance that may be used to protect against the loss of your virtual currency. It may be purchased for personal or business purposes.
Cryptocurrency insurance is similar in concept to many other types of coverage, particularly cryptocurrency insurance. Cryptocurrency insurance policies are designed to protect you from a variety of potential losses and expenses related to your digital assets, including theft, damage from natural disasters or accidents, hardware failure and more. The exact coverage varies by policy, but it may include losses like:
- Losses caused by viruses or malware
- Losses resulting from hacking or unauthorized access
- Losses due to government seizure or other legal action
- Losses caused by catastrophic events like floods and fires
- Losses caused by equipment failure
How Does it Work?
Cryptocurrency is still a relatively new market that is constantly changing, with new opportunities and risks emerging all the time. When you’re dealing with such a volatile marketplace, how do you protect yourself from the risks it presents?
Wrapping your head around cryptocurrency insurance can be a daunting task. But at its core, cryptocurrency insurance works in much the same way as traditional insurance. The main difference is that rather than insuring against damage or loss to a physical asset, cryptocurrency insurance protects against loss of crypto assets. In both cases, you pay an insurer a premium (insurance fee) for coverage against a specific risk. If that risk becomes real, the insurer will reimburse you for your losses up to the value of your policy.
Your insurance company will typically help you set up a segregated account that holds your virtual currency and also provide you with a private key so you can access the account. You can use this account to store, buy and sell cryptocurrency as you please. If anything happens to your account (like if it’s hacked), your insurer will replace the lost funds so you don’t lose money in the long run
