A Cardiff-based startup launched the world’s first-ever insurance policy for cryptocurrency. Coincover’s policy will cover 100 different types of cryptocurrency assets.
One of the major reasons keeping people away from cryptocurrency is its susceptibility to hacking. Since there is no physical reserve backing, and the only record of a customer’s digital assets is with the exchange managing those assets. Once, that exchanges records are tampered with, the customer has no way of reclaiming his digital assets. This deficiency is keeping banks and other financial institutions from integrating cryptocurrency into their systems.
Customers log into digital exchanges using their wallets. Hardware wallets are being widely used where the customer’s private keys are stored in an electronic device. These are considered more secure than online wallets as they are isolated from the internet. But they are also susceptible to theft or getting lost.
Under the insurance policy, Coincover will monitor wallets 24×7 and report a theft or other suspicious activity, provide offline backup for user’s private keys, help in recovering digital assets if hardware wallets get damaged or lost or if a customer forgets the private key. It will also replace the customer’s stolen digital assets. The monthly service fees will be 0.2% of the amount deposited.
Coincover co-founder, David Janczewski says,” people who have had their Cryptocurrency wallets hacked or lost their investments due to hardware mishaps but with Coincover, we aim to make this a thing of the past.”
With the growing adoption of Cryptocurrency, the need for ensuring it is also growing. Bakkt announced that a $125M insurance policy ensures Bitcoins stored in its virtual warehouse. With Bakkt leading the way, more and more exchanges can be expected to provide insurance cover for digital assets in the coming days. The idea of ensured digital assets will lure more customers towards digital currency and maybe even entice financial institutions to start dealing in them.