Coinbase Explains How Cryptocurrency Works And Why Insurance Should Care

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On Tuesday, April 2, Philip Martin, Chief Information Security Officer (CISO) at Coinbase, talked about his company’s encryption policy, the current state of the encryption market, and his thoughts on the future of this market.


In a publication on the Coinbase blog, Martin began talking about the insurance policy he had had since November 2013 for his hot portfolio. The reason for buying this insurance policy is to protect their customers from loss of encryption money. You do not have to worry about losing paper deposits to customers, as they are deposited in US bank accounts, which are covered by FDIC.


Martin correctly realizes that “the most likely scenario of consumer loss for an encryption company” is “hot wallet loss due to piracy” (the latest example is the attack on Singapore’s encrypted encryption market on March 24). Coinbase’s Hot Wallet policy contains the “$ 255 million limit set by the registered broker Lloyd Aon” and “obtained from a global group of US and British insurance companies, including some of Lloyd’s of London Syndicates.”


Martin then points out that “the two main insurance classes on coded currency today are the Crime and Specie market” and illustrate the difference between them:


Martin says that unfortunately there is a lot of misinformation about encrypted insurance, and he says that encryption companies should try to follow the following guidelines:


• “Companies should focus on insurance for value in flight, which means that stock exchanges and portfolios must have adequate coverage of the crime to fully cover their portfolios (including adequate buffer to deal with asset price spikes). Adequate insurance against crime to cover normal outside customer transaction sizes or enough to cover any asset that can be accessed programmatically if you do not use cold storage. “


• “Companies should not prioritize specific customers with policies aimed at covering all customers.” This is generally defined as the status of the first beneficiary of the loss in a specific policy, which means that the specific customer receives a preference for payments under the policy.


• “Companies may secure cold assets, but they must be on a per-customer basis.”


Both individuals and institutions are advised to know the type of encrypted insurance provided by the service provider:


Although the cryto insurance market has developed dramatically since 2013, there are still many areas where Coinbase wants to see improvements:


“There is not enough risk transfer in the market.” The number of insurance companies that have invested their time in understanding the risks of the coded currency has increased significantly over the past few years, but demand for securing the encrypted currency has increased faster.

Participants in this market “.
• Policies are classified in securities but assets are encoded, which means that in emerging markets it may be difficult for companies looking to develop insurance policy limits at the same pace as asset prices Insurance companies need to retain digital assets in order to provide established policy boundaries In encrypted currencies to avoid differences in valuation.

stomer basis.”
Both individuals and institutions are advised to know the type of encrypted insurance provided by the service provider:


Although the cryto insurance market has developed dramatically since 2013, there are still many areas where Coinbase wants to see improvements:


“There is not enough risk transfer in the market.” The number of insurance companies that have invested their time in understanding the risks of the coded currency has increased significantly over the past few years, but demand for securing the encrypted currency has increased faster. Participants in this market “.


• Policies are classified in securities but assets are encoded, which means that in emerging markets it may be difficult for companies looking to develop insurance policy limits at the same pace as asset prices Insurance companies need to retain digital assets in order to provide established policy boundaries In encrypted currencies to avoid differences in valuation.


• “Policies are generally written to stock exchanges or custodians, not directly to the owners of the encrypted currency.” We need a world in which the owners of the encrypted currency can ultimately ensure that their assets are stored directly with trustworthy, transparent and transparent service providers.

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