(Newswire.net — June 10, 2021) — You may not have known that crypto is also used by insurance companies amongst other businesses. In the current financial climate, there’s a strong relationship between health insurance, leveraged trading, and crypto holdings. But how do insurance companies use crypto and blockchain?
Health Insurance and Cryptos
As premiums increase, policyholders are struggling to pay those premiums by any means necessary: Credit cards, mobile apps, and, of course, lots and lots of hard work. As deductibles eat their lunch money, they look for options to compare plans with resources like iSelect health insurance. When they used credit cards and debit cards, a lot of these companies are now accepting payments in cryptocurrencies. Visa card, for example, has started accepting payments in Ethereum.
This crypto and blockchain usage, however, is not just on the part of the consumer. Insurers are using the blockchain as a tracker for the many elements of an insurance policy and as a tracker for their consumers.
Insurance and Leveraged Trading
Any time you practice leveraged trading, aka margin trading, you are trading on credit. The cryptocurrency exchange, whether it’s Binance, Coinbase, or Kraken needs some type of insurance to cover the trade.
That insurance forces the margin trader to sell whenever the cryptocurrency in question falls to a particular price—the liquidation price. That is why Bitcoin, Ethereum, Litecoin, and other cryptos kept on falling and have corrected as far as 50%.
The margin traders knew that selling at a loss was a bad idea, but they had no choice. Their crypto assets were liquidated by the cryptocurrency exchange automatically when the cryptocurrency in question had hit the liquidation price.
To make sure that this does not happen to you, you might want to have the best Crypto portfolio tracker available. As far as crypto portfolio trackers go, Blockfolio has good marks and so do Coinmarketcap, Coinstats, and Cointracker. Advanced features for your cryptocurrency portfolio could include price alert, live price, and a tax report for both capital gains and unrealized gains. Many of these cryptocurrency portfolio trackers include a free version as well as a mobile app and a desktop version.
Insurance and Crypto Holdings
In the landmark lawsuit between Ripple (XRP) and the Securities and Exchange Commission (SEC), it was proposed that the coin known as Ripple was not a cryptocurrency but was actually a form of speculative security, like a stock or bond, and was therefore beholding to the regulations of the SEC.
This lawsuit actually rocked the home insurance and home loans industry because if Ripple and other cryptocurrencies are actually securities, then this means that they are actually property, which is supposed to be covered by home insurance, regardless of whether that property is removed by a physical burglary or simply hacked electronically.
Cryptocurrencies and other digital assets, like non-fungible tokens, can also be insured on their own. Additional precautions can also be enacted through a variety of crypto wallets and other security measures: Hardware wallets, software wallets, private keys, cold storage, etc. The crypto exchange Coinbase actually provides its own crypto wallet for its customers as one of its basic features.
Depending on your risk tolerance, leveraged trading and paying for health insurance may not be the path for you. It does help, however, to know the invisible hands that are at work behind it all.