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- Non-fungible tokens (NFTs) are a $41 billion industry, and where there are numerous zeros, there is general insurance.
- That is not the case with NFTs, a part of the bitcoin industry that was valued less than 1% two years ago.
However, with the announcement today (March 3) that insurance broker and wealth management IMA Financial is investing in a research and development center to find out how to assess risk and underwrite coverage of NFTs, it appears that the absence of coverage is set to change.
NFT is a difficult commodity
Three leading cryptocurrency exchanges, Gemini, Coinbase, and Crypto.com, each have coverage for assets in cold storage wallets worth hundreds of millions of dollars, while stock and cryptocurrency trading platform Robinhood has Lloyd’s of London coverage for its assets.
Lloyd’s has also teamed with CoinCover to provide people with hot wallet coverage, while in March, Reinsurance giant Aon began a trial program to provide coverage to digital asset enterprises.
Paul Washington, executive vice president of IMA Financial Group, explained that the project “allows us to explore the risks associated with digital and meta assets from within the metaverse, so we can better prepare our clients to manage such risks,” adding that the company takes pride in finding “innovative and effective solutions to manage risk.”
There is a lot of theft, therefore IMA Financial has its work cut out for it. For one thing, NFTs is a difficult commodity to value because, like great art, they are only worth what the market thinks they are — and for insurance reasons, that is strongly influenced.
Another issue is that they look to be just as vulnerable to hacking and theft as bitcoins. An NFT collector stated on Twitter earlier this month that he had been hacked after being duped into clicking on a link that granted the thief access to his digital wallet.
His NFT collection, which included a dozen highly sought-after Bored Ape Yacht Club and Mutant Ape Yacht Club collectibles valued more than $2.5 million, was taken and quickly resold for $700,000 by the criminal before the information of the heist reached NFT marketplaces.
ALSO READ – FC Barcelona are Exploring Metaverse And NFT, Opportunities available in Crypto
NFTS: artwork
NFTs are one-of-a-kind cryptocurrency tokens that can store photos, videos, or virtually any other type of material.
The files are permanent and are recorded on blockchains. NFTs contain artwork, NBA slam dunks, and seven-figure, eight-bit graphics of CryptoPunk aliens. The most expensive, a digital collage by artist Mike Winkelmann, earned a winning offer of $69 million at a Christie’s auction last year – despite the fact that the buyer did not receive the original copyright to the piece, or even exclusive exhibition rights.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
