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What is Bitcoin insurance (Bitcoin hedging)

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What is Bitcoin insurance (Bitcoin hedging)

What is Bitcoin insurance? What is Bitcoin insurance? According to the report of CoinDesk on April 1, the National Bureau of Economic Research recently released a report outlining the methods of providing multiple premium schemes to protect individual investors in Cryptocurrency and blockchain In this article, we will explain why insurance is an important part of Bitcoin investment and what Bitcoin insurance is. Insurance is a secure investment tool that allows users to purchase, hold, and pay interest on their digital assets in a low-risk manner. For example, if you want to use a Bitcoin or other Cryptocurrency as collateral to buy insurance, you need to apply to the bank for a Bitcoin loan. If this loan does not mature on time and cannot be repaid, your funds will be liquidated and sold on the exchange. Bitcoin prices fluctuate greatly, making it difficult to bear losses. In addition, due to its value storage properties, Bitcoin also has potential security risks. Insurance companies can provide Bitcoin insurance services to customers by collaborating with financial institutions. These insurances include: Bitcoin trading platforms approved by the government, insurance against cybercrime activities, and technology solutions developed by third parties. Bitcoin market participants can choose to accept Bitcoin insurance as a way of offering their products and services. For ordinary people, they do not spend Bitcoin to purchase insurance. On the contrary, they can make purchases directly in the market through insurance companies’ websites or brokers. In order to ensure their interests, insurance companies usually charge a fixed annual interest rate of 2% to 5%. But when we consider this situation – which is commonly known as the “pay as you buy” model – we must accept the corresponding Bitcoin payment. Once the price of Bitcoin drops below a certain level, the money will be transferred to the insurance agent. Insurance companies can not only assume the obligation to compensate, but also take responsibility for the entire event. Bitcoin miners are responsible for safeguarding the ownership of Bitcoin mining equipment to avoid loss or damage to Bitcoin mining facilities, as they cannot be completely independent of any entity. As more and more large enterprises and organizations adopt this emerging technology, this issue has become even more important In addition to insurance, “Bitcoin Mining” also has many other services worth exploring. For example, insurance companies can provide small fees to insurance agents; The Bitcoin community can also seek help from insurance providers; The custodian has more information about their rights, property, and other matters in the insurance terms. Bitcoin insurance provides a novel option. Firstly, many members of the Bitcoin ecosystem have realized how to obtain insurance coverage and coverage. Although insurance is just one of them, it may be a more suitable option. The second option is to provide insurance without relying on third parties; The third approach is to view Bitcoin as another speculative asset class – similar to gold. However, some Bitcoin supporters believe that Bitcoin hedging

Editor’s note: This article is from the vernacular blockchain (ID: hellobtc), authored by a poplar tree, and reprinted by the Daily Planet with authorization In the past, the term ‘Bitcoin’ has been considered a ‘safe haven asset’ and has also been recognized and pursued by mainstream markets. Between November 1, 2017 and early 2018, the price of BTC almost skyrocketed to a historic high. However, by the end of 2020, BTC began to decline, falling below the $10000 mark and rapidly declining. This has raised doubts in the market: “If Bitcoin can be used as a substitute for gold? Is it really a safe haven?” Based on current market performance, BTC has become an important component of safe haven assets. “With the rise of BTC prices, we see more capital pouring into the Cryptocurrency industry.” Although many people still regard Bitcoin as a store of value, before people around the world became more and more interested in it, some analysts even pointed out that this digital asset has a high correlation – for example, Barry Silbert, chief investment officer of Grayscale Investments, said, He expects more investors to turn to Bitcoin and other digital currencies to store their encrypted assets in the future

What is the reason for the sharp fluctuations of Cryptocurrency such as Bitcoin? “A good example is that after the US Treasury Department recently announced its economic stimulus plan, the US government is taking measures to promote banks to use Cryptocurrency such as Bitcoin for loans or transactions.”. According to the report, interest rates in the United States have been continuously rising since 2008, with the Federal Reserve maintaining an annual growth rate of approximately 2%, and due to increased economic uncertainty, its bond yields have also skyrocketed But compared to traditional financial instruments, There is no difference in encryption technology: “The largest traditional institutions in the world are buying Cryptocurrency; however, for these institutions, the Cryptocurrency they hold is not a real risk exposure but a long-term investment choice; therefore, they usually maintain a relatively low risk level, so that they will not be subject to any significant impact; more importantly, because Bitcoin is based on distributed ledger technology, it is unnecessary to rely on other centralized entities to provide Intermediaries for such services The original text is sourced from zycrypto and compiled by the BluecountainLabs team. The English copyright belongs to the original author. For Chinese reprints, please contact the compiler.

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