Insurance of cryptocurrency accounts and transactions, hedging risks in the cryptoeconomics of the future
Fintech is experiencing unprecedented growth amid the development of the blockchain. This is not surprising, since the financial markets are most ready to implement blockchain-innovations. In fact, many modern securities purchase and sale contracts are already codified, smart contracts have been transferred, and their implementation is automated.
However, in the field of cryptoeconomics, a less common concept is gradually gaining popularity - “insurance”, (insurance technologies), since we all live in a world of probabilities. Billing insurance is one of the incarnations of the Blockchain 2.0 concept, which Nick Szabo was the first to announce, a blockchain-evangelist whom part of the community considers the true author of the Bitcoin protocol.
The idea of creating codified insurance opportunities for cryptoindustry has recently become particularly relevant. Repeatedly, we witnessed the collapse of cryptobusiness due to hacks, flaws in the code and human negligence. All these factors hinder the development of cryptocurrency and blockchain, and discourage new participants from the introduction of technology.
At the same time, according to forecasts of the well-known British analytical company Juniper Research, which is known for its research on cryptocurrencies, incomes of the insurance technology industry may soar up to 235 billion US dollars, which is 34% more than in 2016 (175 billion dollars) . According to experts, the use of smart contracts, which will push the industry to grow, will stimulate the growth of income from “insurance”. The growing, new and huge cryptocurrency market, which also needs to insure accounts, transactions, and hedging the risks of exchange rate volatilities, will undoubtedly provide fertile ground for the development of insurance. The insurance industry is inevitably moving into the field of cryptoeconomics, since this area needs protection against risks.
Juniper experts believe that: “the blockchain technology will accelerate the adaptation of insurance services to consumer requests, ensuring the rooting of smart contracts (or smart insurance policies) in the industry, thanks to the ability to automatically perform actions in accordance with the“ changing circumstances ”of the insured.”
In the process of building a decentralized blockchain ecosystem for safe and easily executable b2b interactions, the Jincor project plans to introduce its own unique development for insuring cryptocurrency accounts and transactions, in order to provide users with the ability to secure their cryptoactives. History shows that such risks are more than real, respectively, a product that allows you to manage these risks is highly in demand.
The special features of the cryptocurrency model consist in dealing with cryptoeconomic risks, cryptocurrency liquidity and a decentralized management model. Consequently, for the development of insurance opportunities within the Jincor decentralized ecosystem, we are faced with the need to implement the business logic of insurance transactions on smart contracts in a decentralized environment.
What would decentralized insurance look like in a Jincor ecosystem?
* Insurance smart contracts will be realized within the framework of the transparent blockchain-ecosystem Jincor, being one of its components.
From the point of view of financial jurisprudence, Jincor cryptocurrency accounts can be considered as deposit funds that can be insured.
Jincor platform intends to offer participants 3 types of insurance opportunities:
- insurance of cryptoactive assets on deposit accounts
- insurance deals
- risk hedging
Insurance services within the b2b blockchain ecosystem will be implemented by large banks and insurance organizations, since the practice of p2p insurance does not meet the demands of the corporate platform, since insurance amounts in the b2b sphere are often huge funds. Deals with insurance companies will be in the framework of the blockchain ecosystem, using the Jincor patterned smart contracts.
If an insured event occurs (a hacking service, corporate mail, etc.), the ecosystem participating organization will be able to contact the insurance company and receive the amount of the insurance indemnity if the insured event does not detect forgery of evidence. The results of the insurance proceedings of the counterparties will be able to appeal in the process of a decentralized arbitration hearing. This procedure is described in one of our previous articles.
In addition to standard insurance situations (hacking, embezzlement), the blockchain ecosystem should provide for the possibility of insuring against fluctuations in the value of market assets, or hedging cryptocurrency risks.
Usually, hedging is carried out for the purpose of insuring against sudden changes in market conditions and the most common type of hedging is futures contracts.
Derivative financial instruments (derivatives) based on cryptocurrencies are now in demand more than ever, and their development is only accelerating, since many companies and individuals rely on the long-term prospects for cryptocurrencies, hoping that their value will continue to grow.
However, within a reliable environment, holders of cryptoactive assets should be able to protect their investments without leaving for Fiat.
Financial instruments, such as futures and options, will provide users of the Jincor ecosystem with opportunities to hedge risks, as well as help stabilize the exchange rate.
The leaders of many crypto-currency companies are already looking for ways to insure cryptoactive assets and blockchain insurance can help them with this.
Jincor is a holistic ecosystem, in which participants have the opportunity to use all modern developments in the field of blockchain, without having special technical knowledge. On the Jincor platform, organizations can easily make b2b cryptocurrency payments, establish contacts, enter into smart contracts, automate their business processes, insure cryptoactives and, if necessary, use the option of decentralized arbitration.
Starting from August 21, JCR tokens can be purchased as part of the pre-ICO 2 times cheaper than the starting price of the token ( ICO will start on November 1 ). Buying JCR tokens on pre-ICO will provide you with a constant progressive profitability, since their value in the future will depend on the popularity of the platform in the business environment (and this popularity is beyond doubt).