Learn about bitcoin insurance - how cryptocurrency is insured. Since these currencies are virtual & their market value varies daily, insurance coverage for a loss or theft of bitcoin is both an opportunity and a challenge for insurers.
Bitcoin Insurance - How Cryptocurrency Is Insured
For those using Bitcoin, there are a few considerations that you want to make, because of the unique nature of cryptocurrency, and the new regulation behind it. The first thing you should understand is that outside of the United States, cryptocurrency like Bitcoin may not be recognized as currency or as legal at all. In the United States, the Internal Revenue Service has classified Bitcoin as an asset, which means that it can now be insured.
But because of the digital state of cryptocurrency, and the variable market value, insurance coverage can be challenging. It can also be an exciting opportunity for insurance companies. This article will discuss bitcoin insurance - how cryptocurrency is insured.
Bitcoin is one of the many alternative and digital currencies that exist on the market today. A virtual currency is one which is exchanged using completely digital systems and a cryptocurrency is one that uses cryptography through what is called a blockchain in order to control transactions and verify them. There are several popular types of cryptocurrency out there and more are coming all the time. But Bitcoin was one of the first on the market and it is become the most popular cryptocurrency. It is also become the one worth the most.
The State of Cryptocurrency
in 2014, the IRS stated that Bitcoin would be treated as an asset or property for tax purposes instead of actual currency. This means that Bitcoin will be required to be subject to capital gains tax, but the good thing for those who are dealing in Bitcoin is that it now has a legal status which can be used to get insurance. Previously, investors were taking a chance by buying into Bitcoin or trading it, and merchants that accepted Bitcoin had no guarantee that they would be able to use the currency if they were to keep it.
Most important of all, people that dealt in cryptocurrency had no way to report it on their taxes, which made it difficult when it came to insurance. But as of the 2014 ruling, investors no longer have to worry about investments they make in Bitcoin are illegal or how they should report them to the IRS.
Cryptocurrency and Insurance
Bitcoin insurance - how cryptocurrency is insured. Virtual currency like Bitcoin can definitely have a positive impact when it comes to insurance. Bitcoin has now become a new class of asset that can be insured, and insurance companies like the fact that it can rise in value before being converted into actual currency, which means that the premium payments that are paid in virtual currency may be more in the future - if the currency is not converted immediately.
Of course, Bitcoin could also fall in value before the premium payments are converted into currency, which would make those premiums less than what they should be. This is all assuming that someone is paying their premiums in cryptocurrency like Bitcoin in the first place.
As far as how cryptocurrency works when it comes to insurance, merchants that accept Bitcoin as payment are doing the same thing that they would do if they accepted any other high-value asset as payment - such as gold or silver. However, one thing that consumer should keep in mind is that Bitcoin is not covered under their homeowners or business policy when it comes to theft. Theft with Bitcoin is rare, but it has happened in the past, and customers may want to make special arrangements with their insurance company to cover themselves in case of this possibility.
While it is true that insurance companies have been slow to create policies for Bitcoin and other virtual currency, there are some companies out there that will work with consumers over cryptocurrency. The Great American Insurance Group has a policy in place for Bitcoin, and INGUARD accepts premium payments as Bitcoin as well.
Bitcoin Insurance - How Cryptocurrency Is Insured - The Bottom Line
We hope this article on bitcoin insurance - how cryptocurrency is insured has been informative. It is likely that most insurance companies will create policies that will allow them to insure Bitcoin and other cryptocurrency in the future. However, because the volatility of Bitcoin and especially the volatility of the other cryptocurrencies that may not even last, these policies will likely be a long time coming and it will take time for cryptocurrency to become as trusted of an asset as gold, silver, jewelry or other high-value assets.