Crypto Insurance: A Necessity Or Not?

Insurance is highly important if you are trying to be safe or play smart, it is the act of securing the future of your asset should incase any unforeseen circumstance occurs. It is supposed to be one of the best and wisest decisions you take in your life, but when you are investing with the wrong platform, it is considered a waste of money, time and hope. In the tradFi world, insurance is widely known and used, you find insurance used in almost anything that involves risk, no matter how small the risk might seem. We are talking about from phone, travel, car, properties, education and health. The funny thing about insurance is that, it’s a periodical payment. As long as you don’t lose whatever you insure in that period of payment, the insurance payment becomes the company’s money, so you have to renew it.

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For instance, if your car insurance policy states that you have to pay about 1% of the value of your car every six month, this means that if nothing happens to your car within this period, the insurance won’t refund your money back to you. If you don’t renew the insurance after the end of the 6th month, your car won’t be considered insured and if anything happens to your car on the 7th month, insurance won’t cover it. It’s the policy might sound a little unfair, because accident and unforeseen circumstances can’t not be predicted, you have to always be insured.

Now let’s talk about crypto, crypto is one of the riskiest assets you can think of. Almost everything about crypto is risky, the volatility is risky, one second you are having a high valued asset, the next second your asset is getting devalued over 70% what do you do? You either sell and take your loss or leave it and hope it pumps back. What if there is a crypto insurance for devaluation of crypto assets depending on how much you insure or pay for insurance. What about insurance centralised crypto exchange insurance, we all saw what happened to FTX, imagine there is an insurance for that, people won’t feel so bad for the unfortunate situation that happened with FTX and it’s customers.

Crypto being one of the riskiest assets you can own is subjected to a lot of risks, if you leave your crypto asset in a centralised exchange, the exchange can shut down with your asset in it and be illiquid because they have mismanaged customers funds. If you decide to leave your asset in a DEX wallet, hackers can hack your wallet and steal your funds. You might click the wrong link and get hacked, there are so many ways you can lose your crypto assets, so insurance i feel should be a good idea and solution to crypto investments.

Posted Using LeoFinance Alpha