Several mainstream providers now cover blockchain projects, mainly protecting custodians of funds. Allianz, XL, AIG, and Chubb—among others—cover cryptocurrency lost through malicious activity and hacks on exchanges.
The question is…
Can You Trust an Institution?
Costing five-times what a typical business pays for the same level of coverage, one has to question the value of existing policies.
To date, no insurer has actually paid out, despite the ongoing hacks.
More worryingly, Aon claims 50% market share. In a world built on decentralization, participants are unlikely to have faith in a monopolistic policymaker, particularly given few insurers offer concrete details as to what their policies cover.
Best case, expect to be paid back “cents on the dollar.”
Skeptics suggest that coverage is more PR than security. Coinbase, for example, only insures funds stored online—a mere 2% of all the cryptocurrency it holds—a ‘drop in the ocean’ in the event of a major breach.
Insurance is a Significant Milestone in Mass Adoption
In an industry that struggles for credibility, insurance does offer a sense of legitimacy. And while you might not choose institutional coverage, such alliances have their benefits: they not only ‘protect’ customer funds, they spur investor confidence.
Provided the insurance covers the risk.
Hillik Nissani helps institutions trade cryptocurrency through brokerage service Cryptalgo and his take is that the number of exclusions ‘can make the whole policy close to useless.” So, Cryptalgo wants to self-insure, lending credibility to its service even if it means carrying additional risk.
Cryptalgo is not alone in exploring such policies with one project on the cusp of realizing this crucial milestone.
Elitium | Transforming the World of Luxury
The Elitium Network streamlines luxury living through a comprehensive smartphone application that provides access to specialty brands and services within a single platform.
High-net-worth consumers have a top-end one-stop-shop supported by a secure, fast and easy-to-use payment service, hosted entirely on the blockchain. And Elitium has created a native token – EUM – to improve efficiencies, accuracy, and speed of operations within its ecosystem.
However, given the nature of Elitium’s customers, transactions can be in the thousands. So users stand to lose significant sums should things go wrong, highlighting several critical considerations:
- Cryptocurrencies are a favorite target of cybercriminals
- High-net-worth individuals attract sophisticated scams
- Transactions on the blockchain are irreversible
To counter concerns, Elitium has come up with an innovative solution that both guarantees the security of funds as much as simplifies platform adoption.
Introducing EUMI: Blockchain’s First Insurance Token
Cryptocurrencies are little more than a few lines of code. They have no government backing (yet!), nor any link to a physical commodity or tangible asset. Moreover, anyone who falls victim to a malicious attack has no legal recourse.
Yet, security is integral to the adoption of cryptocurrency in general, and EUM in particular.
By developing a self-insurance policy using a second native coin – Elitium-i (symbol: EUMI) – the Elitium Network can offer ‘in-house’ protection of user funds. Participants benefit from both the inherent security of distributed ledger technology alongside the back-up of a tokenized insurance service.
No dependency on a vague policy offered by a non-specialist carrier; instead, a bespoke solution developed specifically for the blockchain space that allows Elitium to reimburse lost funds in the event of fraud, a hack, or a compromised account.
The Cornerstone of the Elitium Network
Elitium-i combines the flexibility of blockchain solutions with the most robust features of standard payment providers like PayPal and Visa. EUMI keeps funds secure, even in the event of a breach—and better than existing insurance, it costs the consumer nothing.
The process is simple, transparent, and swift.
- User notes suspicious activity;
- User alerts Elitium Fraud Team;
- Fraud Team requests evidence via a form, starting the ‘fund recovery’ process;
- If there’s sufficient evidence to support the claim, the user receives an EUMI balance equal to the lost EUM;
- In approved cases, Elitium notifies the relevant authorities, opening a criminal inquiry.
In essence, EUMI duplicate EUM, with one nuance: users cannot trade EUMI on an exchange.
EUMI allow the Elitium Network to guarantee funds and let users transact, while the restrictions protect the network tokenomics. On the partner side, brands and service providers can convert their EUMI balance into fiat currency through Elitium’s Online ATM.
EUM cannot promise invincibility, but with EUMI, customer funds are 100% secure.
To read about the Elitium Luxury Lifestyle Network and Elitium-i — with extended coverage available to Elitium Diamond Members that protects against human error— refer to the Elitium Whitepaper here.