Bitcoin Insurance: Is It Even Possible?
It has just happened again: A hacker stole cryptocurrencies worth around 600 million dollars in the USA. Affected was the platform Poly Network, which specializes in the transfer or exchange of cryptocurrencies: The thief had cracked the security systems and hijacked balances of the cryptocurrencies Ethereum, BSC (Binance), and Polygon. Later, he returned the credits – in return he was promised a reward of half a million dollars.
The same thing has happened often enough with Bitcoin. In North Korea, according to media reports, there are entire departments of state-controlled hackers who specialize in illegal blockchain operations – i.e. theft. In this way, they help to finance the regime.
Even without thieves, a Bitcoin balance can be lost. If the keys are on a hard drive, there is a risk of hardware damage or unintentional overwriting. That is why it is critical to use crypto wallets like Coinbase and MetaMask (see the Coinbase Wallet vs MetaMask comparison here) which are secured platforms to store your digital assets.
Particularly spectacular is the case of the virtual Bitcoin millionaire Stefan Thomas: He owns a hard disk with Bitcoins worth a nine-digit dollar amount. What he lacks is the hard drive password, because he forgot that. The backup software of the disk allows two more input attempts. Then the maximum number of failed attempts is reached, and the security program deletes the data on the hard disk.
ALSO READ: AXA Accepts Bitcoin as Means of Payment
Is it possible to insure Bitcoin?
The short answer is: There is currently no property insurance for Bitcoin that replaces the loss or theft. This is due to the fact that insurers can hardly calculate the risk. After all, it depends on the price development. The legal status and official value are unclear, as Bitcoin, Ethereum & Co. are not official means of payment and, unlike foreign exchange balances or securities, are not subject to accounting regulations. From a property insurer’s point of view, Bitcoin balances in the portfolio to be insured, i.e.dem assets of the company, do not appear as a specific value.
In addition, in the event of mass theft, as with Poly Network, very extensive insurance claims threaten in one fell swoop. Such risks also make property insurers shy away.
The bottom line: There have been previous announcements of Bitcoin insurance products. Corresponding offers did not come on the market.
A fidelity insurance or cyber insurance can help with clarification
Better are the prospects of covering the damage if you suspect that your own employees or agents have stolen or embezzled Bitcoin balances. If the company has fidelity insurance or cyber insurance, the insurer can cover the costs of forensic investigation. Experts in IT forensics can point the way to the perpetrators, from whom you can get the credits back with a little luck. Of course, the claim depends on the insurance terms of the policy.
Tags: Bitcoin, crypto insurance