The rising number of crypto frauds and thefts and a renewed interest in digital currencies in 2019 are helping boost the growth of crypto insurance.
Crypto insurance’s rapid growth
When the crypto market was booming in the second half of 2017, crypto exchange was a growing business. New companies like Binance had just started to catch the fancy of crypto enthusiasts, and the size of the industry was growing beyond proportion. However, 2018 came with an equally massive crypto disappointment. During this time, crypto thefts and hacks didn’t stop. Now, in 2019, when the market is gaining momentum again, we are witnessing the rise of another industry- crypto insurance.
The total market valuation of digital currencies is about $300 billion and everyone- from retail traders to institution traders, wants to safeguard their assets. Aon Lloyd’s of London and Coalition are some of the firms that are helping users attain peace of mind.
According to Coalition CEO Joshua Motta, the crypto insurance market didn’t exist two years ago. However, at this moment, the industry is worth $200 and $500 million in terms of premium revenue. Interestingly, there is less than $1 billion in insurance coverage available today, which means that there is space for explosive growth in this business.
A lucrative business
It is not just theft and hacks that concern crypto investors. The ongoing political instability is also causing significant changes in the crypto sector. With the US and China engaged in a trade war and President Donald Trump’s decision to impose a massive 25% tariff on Chinese goods worth $300 billion, things could change in crypto. It is expected that the tensions between the two countries could make Bitcoin hit its all-time high of $20,000 yet again.
Bitcoin’s growth could be contributed to the fact that blockchain is quickly finding its way into enterprises. From banks to grocery chains and coffee shops, everyone is interested in launching their own digital ledger. Facebook went a step ahead of launch its own digital currency called Libra.
The rising hype around cryptocurrencies has a dark aspect too. With the rise in Bitcoin prices, the number of hacks and thefts increases too. Crypto-focused insurance products can not only help in providing peace of mind to digital coin investors but also help in diversifying the broader crypto industry. It is one of the essential steps in developing a financial infrastructure that suits the needs of this sector.