Lack of Insurance Coverage Impedes Cryptocurrency's Adoption

Reuters revealed that investors in Hong Kong are willing to invest in cryptocurrencies, but most are reluctant due to the level of hack and theft of these digital assets. These are people who would’ve made contributions that will significantly have an impact on the market. However, this is not so because there is no proper insurance coverage for the crypto industry.

Lack of Insurance Coverage Discourages Potential Investors

The report reveals that when investors accrue losses due to hacks and theft, their cryptocurrencies are lost entirely and they cannot be restituted. This was attributed to the fact that it is difficult to trace such transactions to know who had committed the crime. Besides, insurers are not willing to cover these losses due to the nature of the industry.
Despite the fact that these cryptocurrencies are stored in offline or online wallets, they are still prone to attacks. If the funds are not stolen, it is also possible for the user to lose their private keys. In the case of the latter, a loss of these keys means that the funds held within those wallets can never be accessed.

The Volatility of the Crypto Market is Another Major Factor

Investors are also unwillingly to invest due to the volatility of the market. These are people who have all agreed that cryptocurrencies have a future, but their rising and falling market prices are discouraging. This is evident in the fact that the $800 billion market as at January this year, is now worth about $120 billion.
Therefore, potential investors will have several requirements before they invest in these virtual currencies. According to Hoi Tak Leung, a senior lawyer in Ashurst’s digital economy practice;

Institutional investors who are interested in investing in crypto will have various requirements, including reliable custody and risk management arrangements

Unregulated Market Makes Investors Reluctant

Asides the susceptibility of these wallets to attacks and the volatility of the market, no proper regulations are governing the use of these digital assets. As such, customers are not fully protected. Despite the reluctance of these investors to buy into these virtual currencies, it seems that a lot of companies are promoting its use. Notable among them, are the crypto companies themselves.
$Pac coin, for instance, a cryptocurrency company is giving to charity in Venezuela. The company said that the best way to encourage the adoption of its virtual asset is to educate people. This will help to gain their trust when it comes to the product. When this happens, there will be a massive adoption of the virtual currency.

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