Risky crypto investments: Crypto insurance: Investors can protect themselves against these risks | news

• Cryptocurrencies are considered high-risk investments
• However, investors can also protect themselves against certain risks

• Service providers offer insurance

Crypto investors today can purchase insurance from various service providers to protect against certain risks in the crypto market. Insurance is already available on the market for, among other things, the following risks.

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Hacks for crypto exchange

According to BTC ECHO, a danger that crypto investors can protect themselves against is hacker attacks on crypto exchanges such as Binance or Coinbase, where many crypto investors hold their currencies. Although crypto exchanges are considered safe, investors can protect themselves even more. If there is a hacker attack on a cryptocurrency exchange, the exchange compensates the investors. But if the stock exchange cannot pay for the damage itself, the insurance company will take action.

For example, the service provider Crypto Shield claims to offer “the first regulated insurance product to private crypto investors that covers the theft of crypto while in the custody of qualified exchanges.”

According to BTC ECHO, the minimum sum insured and the term vary depending on the provider and asset. Some policies will also include protection against payouts.

Stablecoin De Peg Risk

Along with this, investors can also protect themselves against a decoupling of stablecoin by taking out insurance against decoupling of a stablecoin – known for its stable value – from its underlying asset. If stablecoin then falls below a specified limit over a certain period, the insurance coverage takes effect. For example, the service provider Opium Finance offers a monthly insurance against USDT solvency. “If the USDT price falls below $ 0.95 at the end of the insurance period, the buyer will receive a full payment on any price difference,” the company said on its website.

Vulnerabilities in intelligent contract

Attacks on smart contracts are also common in the crypto world. Here, the insurance companies provide the opportunity to protect themselves against the exploitation of vulnerabilities in smart contracts and the associated losses through exploits and hacks. According to BTC ECHO, for example, InsurAce will refund compensation if investors lose cryptocurrencies stored in the smart contract as a result of a hack. Opium Finance offers Smart Contract Bridge protection. “If a bridge is hacked at the end of the insurance period, the buyer will receive a payment based on the percentage of money lost,” the insurance company said.

Some insurance companies also offer individual packages that allow investors to protect themselves against multiple risks – the insurance coverage is gathered in one contract. However, according to BTC ECHO, the minimum insurance amounts are usually significantly higher.

In addition, of course, insurance providers are constantly working on other products that will help increase the confidence of buyers and sellers in the crypto market, such as insurance coverage for errors by providers of crypto trading sites or insurance for hardware wallets or offline purses, so-called “cold wallets”.

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