Can you protect NFTs through policies? Insuring NFTs 101
Insuring the Intangible
Ever thought about owning a piece of art halfway across the world, with the effort needed to hold no more than a few simple clicks on a screen? With blockchain technology, the idea is not as outlandish as you may imagine! It is now possible to own physical assets in a digital form, but you will have to secure those assets against theft, forgeries, and unfair price estimations.
Virtual assets such as Non-Fungible Tokens (NFTs) have created new global challenges for standardized asset protection agencies. There are no uniform protection policies for these assets. This challenge is primarily a result of their intangible nature, and therefore, owners of such investments need to self-insure them to maximize their benefit. There are several solutions that can accomplish this and ensure that these assets are protected to the fullest!
How does one go about insuring something that they cannot even see? Read on!
What is an NFT?
NFTs are essentially digital signposts that allow an individual to own a unique, one-of-a-kind item online such as artwork, domain names, and digital entertainment products and store them on the blockchain. They contain Uniform Resource Identifiers (URI) that act as unique references to the digital assets. They also operate as a smart contract with a blockchain platform that allows owners to store their assets in a virtual wallet. You can learn more about NFTs here.
Can NFTs be Insured?
The main challenge in insuring an NFT arises because it needs to be protected on two fronts: digital and physical.
As an NFT owner, this may ring some alarm bells for you. File size limitations mean that the online half of an NFT, the URI, is the only thing that exists as a verifiable indicator of ownership on a blockchain platform as the original file may not always be storable on the platform itself. In such cases, the digital assets, i.e., original files are stored separately and linked to the NFT through decentralized storage systems.
It is at this demarcation that the challenges of ensuring NFTs emerge. Most standard policies do not recognize them as property due to their lack of a concrete chain of ownership. Therefore, they are ineligible for policies offered by these agencies. Furthermore, blockchain platforms are primarily decentralized and may not qualify for cyber insurance policies other than ones focused on asset restoration.
Authentication mechanisms used by such platforms also vary. Such tools vary in the parameters they use for authentication, such as energy consumption (proof of work) or the use of tokens (proof of stake). It implies challenges in gaining accurate estimations of an NFT’s value in the event of a sale.
While all of this may conclude that it is a challenge to insure an NFT, it is equally important to remember that they are subject to hacking and other forms of cybercrime, making their security paramount.
Decentralized Insurance for NFTs — Insurance for the Digital World
The challenges faced by traditional insurance providers in the virtual asset space may be complex for new NFT owners to overcome and secure their newfound assets. Fortunately, there is good news for such individuals and organizations.
A pioneering crop of third-party providers has risen to fill in the gaps left by the big players in the insurance industry. These innovative breeders aim to provide solutions that specifically tackle the challenges intangible virtual assets pose towards insuring them.
Furthermore, they offer comprehensive solutions that can be adapted to a variety of authentication mechanisms, addressing challenges when attempting to secure NFTs across various blockchain platforms. For instance, Immutable Holdings, a Canada-based company, is already using NFTs in novel ways, adding a social component to a user account that allows them to display owned NFTs using software that aggregates NFTs across platforms into a single space.
Should You Purchase and Insure NFTs?
Insuring NFTs means free from forgeries and duplication of the original transaction of proof of stake.
bitsCrunch provides individual solutions to these significant requirements under Unleash NFTs. It includes Crunch DaVinci, which protects digital assets from forgeries by monitoring and flagging any potential threats to the asset’s security, Scour, an AI-enabled gatekeeper against spoofing attempts on the proof of stake for digital assets, and Liquify, which allows users to quickly and seamlessly obtain fair price estimates on their digital assets.
As guardians of the NFT ecosystem, we at bitsCrunch protect digital asset owners from theft or fraud and help Decentralized Insurance Providers to make informed decisions. Thus, we provide added value to Decentralized Insurance Providers, as they can use our securing services to provide insurance coverage to the NFT assets and also provide peace of mind in the event of a trade for NFT creators and collectors.
Be the Investors of the Future
While there are certainly challenges to the purchase and protection of NFTs, there is no denying that they are a valuable digital asset that can reap significant dividends in the hands of a smart investor. With the right tools to secure them in the digital marketplace, these digital assets have seen a considerable increase in their usage as of 2021. Considering that more than 13% of Americans have acquired digital assets this year, it is evident that digital assets are here to stay and are a crucial part of investment portfolios for many enthusiasts. By ensuring that your digital assets are secure, free from duplication, and easily accessible, you can ensure that you are not left behind in the NFTs investment space while enjoying the security and peace of mind that only an insured asset can provide!
bitsCrunch is the Guardian of the NFT ecosystem. We are one of the top 4 AI companies in Munich, Germany that excels in Blockchain technology. We believe that blending a proven technology like Artificial Intelligence with Blockchain technology can do wonders and make the ecosystem much more safer and reliable ! Our mission is to create impactful insights from intricate data sources, by harnessing predictive analytical systems which are empowering organizations with actionable intelligence.
- NFT Information Center (Unleash NFTs), A real-time NFT analytics dashboard and portfolio tracker.
- AI-Enhanced Safety Feature (SCOUR), An AI agent that acts as a watchdog to flag spoofing transactions that manipulates both volume and price of the assets in the NFT ecosystem.
- Fair Price value estimation for an Asset(Liquify), A fair value estimation & analytics for Digital Assets (NFTs) using AI to empower the community to embrace and value their assets in real-time.
- Digital Asset Forgery Detection System (Crunch Davinci), An AI model that flags forgeries, copycats and bootleg digital art contents thereby protecting the artists and their creations.