«…there is no blockchain technology used in our project!»
Here is the first part of the video interview with Timofey Volkov on the independent Russian portal Aurora Blockchain Capital. The biting and stinging questions of impartial presenters did not remain without comment by the CEO of CRYPTOINS.
What is your project about?
The idea to make an insurance product for the crypto market emerged in the summer of 2017: the market was essentially free of insurance offers, so there was huge potential. We focused on a product we knew would work and decided to use our own funding to develop it on our own platform as a token-free insurance product. This is how the CryptoIns platform was created. What we do is a completely new thing. We insure traders’ funds on cryptocurrency exchanges, accepting insurance premiums and making settlement disbursements in cryptocurrency. No one else has done it to date.
According to statistics, more than 50 crypto exchanges have withdrawn from the market over the past 8 years, and remarkably 20 of them left the market due to hacker attacks.
You said before that CRYPTOINS insure against the misconduct of staff cryptobirge, right? How do you determine who is to blame for the whole team? And as far as we know most of them [crypto exchanges] do not have a legal entity..
We do not need to know who sits at the monitor of the computer and maintains the crypto exchange’s site. Most importantly, CRYPTOINS collaborates with Group-IB, the company that provides cybersecurity and cybercrime investigations. Based on the data received from Group-IB, we classify insurance claims and accordingly make a decision on the further payment of insurance premiums.
Who pays insurance premiums?
Insurance premiums are paid by individuals. Traders.
Do you insure the accounts of these traders depending on the size of the assets contained on them?
We were forced to introduce a limit of liability – one policy on one exchange. The amount of insurance coverage on the policy is from 5 to 15 Bitcoins depending on the exchange. And this is due to the fact that during the analysis of our target audience it was revealed that our potential customers hold on their accounts an average of 0.1 to 15 Bitcoins. The figure may not seems so significant, but this amount is often enough to cover the funds of one particular trader.
And if your users (call them this way) split their assets into several accounts, will you take them to insure?
Definitely yes! But all these accounts will be covered by an insurance amount of 5 – 15 Bitcoins.
What stock exchanges, funds are you ready to work with now?
Taking out an insurance policy is as simple as registering on CryptoIns and choosing the accounts in an exchange or wallet the user wants to insure. The insurance is now available for 28 different exchanges and wallets, including well-known mainstays such as Binance, Bitfinex, Bitstamp, Bittrex, Poloniex, MEW, Ledger, Trezor, and others, as well as relatively new hosts for accounts.
Mind telling us the most pressing issues, problems that prevent you from developing your project?
This is a rather important question and I am ready to answer it. To summarize, this is:
- lack of insurance statistics that we can trust.
- lack of reinsurance capacities, which does not allow us to develop business on a larger scale (in a reinsurance contract, the capacity means the maximum amount specified in the contract, within which the reinsurer will be obliged to pay the insurer any losses attributable to its share. From a macroeconomic point of view, capacity reflects the cumulative possibilities of the reinsurance market to accept for reinsurance the risks of direct insurers).
How do you assess the prospects for finding these reinsurance capacities?
Finding a suitable insurance company was one of our main goals. The traditional insurance market is very tightly regulated by local authorities in different countries. This includes licensing, extremely tough requirements for the storing of reserves, insurance rates, reporting and much more. As a result, there are very few companies who are both legally able and willing, because of the inadequate legislation among other things, to form reserves, and receive and make payments in cryptocurrency.
The initiative of creating the first online insurance service was supported by Selecta Insurance and Reinsurance Company (Caribbean) Limited, who is able to perform all of the above operations using cryptocurrency according to local legislation.
And you do not insure cold wallets?
Traditional insurers are willing to insure cold wallets, but they do so as part of property insurance. By and large, the subject of insurance from traditional insurance companies is a material carrier, and not the assets contained therein in the form of data. And for CRYPTOINS this is not a problem at all.
Why do you pay compensation in bitcoins only?
At the first stage, it was necessary to determine the prime cryptocurrency, on the basis of which we could recalculate all available funds in the investor’s portfolio, or in other words, we was needed to bring all indicators to a common denominator. And since the largest crypto exchanges often convert all currencies into Bitcoin, this is also economically feasible.
Timofey, did your team analyze the competitive environment before launching the project?
It is important to note we see competition in two different «guises»: the first is a platforms (including the blockchain) that implement traditional insurance products such as flight cancellation insurance, property insurance etc.; the second is insurance companies that have proven themselves in the market, which declare their intention to develop insurance products are «consonant» with ours in many aspects of.
I will not be lying if I say that we are the first who embodied the ideas of crypto insurance in iron, glass and wood.
Let’s say a situation arises with one of the exchanges you serve, similar to the situation with Mt. Gox a few years ago. What are your actions in conditions when the future of the crypto exchange is not defined?
So, we have a waiting period, which is 30 days. Accordingly, if during these 30 days no communication takes place and the exchange shows no «signs of life» (for example, it is not possible to withdraw the funds contained in the account) then we pay refunds. If suddenly after 30 days the exchange starts functioning, the right of regress claim within the amount paid will be transferred to us.
The full version of the interview is available here.
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Your CRYPTOINS team.