In the field of cryptoeconomics, a less popular concept – “insurancetech” (insurance technology) – is gradually gaining popularity, as we all live in a world of probabilities. Account insurance is one of the embodiments of the Blockchain 2.0 concept, which was first voiced by Nick Szabo, a blockchain evangelist who is considered by some in the community to be the true author of the Bitcoin protocol.
The idea of creating codified insurance options for the crypto industry has become particularly relevant recently. Repeatedly, we have witnessed the collapse of crypto businesses due to hacks, flaws in the code, and human negligence. All these factors are holding back the development of cryptocurrencies and blockchain, and discouraging new entrants from adopting the technology.
At the same time, according to the forecasts of Juniper Research, a well-known British analytical company, which is known for its research on cryptocurrencies, the revenues of the insurance technology industry may soon soar to 235 billion dollars, which is 34% more than the figures of 2016 (175 billion dollars). According to experts, driving the growth of insurancetech revenues will be the application of smart contracts, which will push the industry towards growth. A fertile ground for the development of insurtech will undoubtedly be the sprawling, new and huge cryptocurrency market, which also needs to insure accounts, transactions, and hedge risks from exchange rate volatility. The insurance industry is inevitably moving into the crypto-economy because this area needs risk protection.
In the process of forming a decentralized blockchain ecosystem for secure and easily executable b2b interactions, the Jincor project plans to introduce its own unique developments for insuring cryptocurrency accounts and transactions to provide users with the ability to secure their crypto assets. History shows that such risks are more than real, accordingly, a product that allows to manage these risks is highly demanded.
The peculiarities of the cryptocurrency model are that one has to deal with crypto-economic risks, cryptocurrency liquidity and a decentralized management model. Hence, in order to develop insurance capabilities within Jincor’s decentralized ecosystem, we were faced with the need to implement the business logic of insurance transactions on smart contracts in a decentralized environment.
What will decentralized insurance in the Jincor ecosystem look like?
Insurance smart contracts will be implemented within Jincor’s transparent blockchain ecosystem, being one of its constituent parts.
From a financial jurisprudence perspective, Jincor cryptocurrency accounts can be considered as deposit funds that can be insured.
The Jincor platform intends to offer members 3 types of insurance options:
- Insurance of crypto assets in deposit accounts;
- transaction insurance;
- risk hedging.
Insurance services within the b2b blockchain ecosystem will be implemented by large banks and insurance organizations, as the practice of p2p insurance does not meet the demands of the corporate platform, as insurance amounts in the b2b sphere, often represent huge amounts of money. Transactions with insurance companies will be concluded within the blockchain ecosystem, using Jincor’s template-based smart contracts.
When a foreseen insured event occurs (hacking of a service, corporate email, etc.), the ecosystem member organization will be able to apply to the insurance company and receive the amount of the insurance payment, if the insurance case proceedings do not reveal evidence tampering. The counterparties will be able to appeal the results of the insurance proceedings through a decentralized arbitration hearing process. This procedure is described in one of our previous articles.
In addition to standard insurance situations (hacking, theft), the blockchain ecosystem should provide for the possibility of insurance against fluctuations in the value of market assets, or hedging cryptocurrency risks. Usually, hedging is done to insure against sudden changes in market conditions and the most common type of hedging is futures contracts.
Derivatives (derivatives) based on cryptocurrencies are in demand now more than ever, and their development is only accelerating as many companies and individuals bet on the long-term prospects of cryptocurrencies, hoping that their value will continue to grow.
However, within a secure environment, holders of cryptoassets should be able to protect their investments without going into fiat. Financial instruments such as futures and options will provide users of the Jincor ecosystem with opportunities to hedge risk, as well as help stabilize the exchange rate. Executives at many cryptocurrency companies are already looking for ways to insure crypto assets and blockchain insurance can help them do just that.
Jincor is a holistic ecosystem where participants are able to utilize all modern blockchain developments without any special technical knowledge. On the Jincor platform, organizations can easily make cryptocurrency b2b payments, establish contacts, enter into smart contracts, automate their business processes, insure cryptoassets and, if necessary, use the decentralized arbitrage option.
