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February 23, 2022updated 25 Feb 2022 7:44am

Coincover tests the water of crypto protection

Cryptocurrency protection provider Coincover has extended its services to retail investors. Asset safety concerns are a major barrier to crypto adoption and reliable protection options would facilitate broader public adoption.

Scarcity of options for sophisticated crypto protection

Crypto assets, confusingly, have a reputation both for being very safe and very unsafe. This is not a paradox; both are true in different ways. In simple terms, crypto assets are very well-guarded against technical error, but are very vulnerable to human error—and the latter is a consequence of the former. It is almost impossible for your crypto wallet’s address to be guessed because it is a massive, random string, but because of this, the chances are that you have probably written it down on your notes app, or on a post-it by your computer. If you send coins to your wallet’s exact address, your coins will almost certainly arrive uninterrupted. But if you get the address wrong by one letter or one ‘space’ character, your coins will almost certainly be lost forever.

Few sophisticated approaches to keeping assets safe are available. It is common to see ‘whales’—massive, often institutional investors—using the same ‘send a little bit to check the address works, then send the rest’ technique that the smallest investors use.

Coincover offers an alternative

Coincover aims to offer an alternative, sophisticated way to protect crypto assets. It combines technology and insurance to protect clients’ assets. The techniques involved include a ‘Hack Checker’ product that monitors and analyzes account activity to identify suspicious signs; an encrypted vault in which wallet addresses and keys can be stored; and finally, classic insurance-style cover.

Coincover was already available to companies and claimed to have reviewed transactions worth $10 billion in 2021. Coincover’s technology is underwritten by Lloyd’s of London.

Reliable protection would entice hesitant investors

The perceived danger of crypto investments is one of the largest barriers to its adoption. This perception comes from unfamiliarity with the technology and a lack of protection options. Coincover succeeding and expanding would attenuate the latter. There is lots of money to be made for any company that can win investor trust on crypto asset protection, as activity in this sector has been very limited so far. Early cases like Coincover will be watched by investors and technology companies to assess whether crypto protection is a viable and promising market.