Amateurs Dominate Crypto Marketplace
The Intelligent Insurer #12
The cryptocurrency market is dominated by young people whose attitude towards investment is totally different from older generations. Since the cryptocurrency market and digital economy are not as regulated as other traditional markets, the risk exposure is understandably higher.
The majority of young investors choose to navigate these markets without adequate protection for their digital assets. This is one of the main reasons why losses are so high among cryptocurrency investors.
In this release of the Intelligent Insurer, we highlight the prevalence of younger generations in the industry. We detail the risk exposure that their investment behaviour entails while suggesting effective ways that they can minimize their risk exposure in the market.
Crypto Market Dominated By Millennials
A Gemini report revealed that the most dense population of cryptocurrency investors falls within the age range of 18–34 years. This is one of the key demographics that challenges the profile of traditional investors.
This class also dominates the category of people who may not have invested in cryptocurrencies yet, but are interested in doing so. The next dominant category is those between the ages of 35–44 years.
(Source: Gemini.com)
The relatively open access to the industry may play a key role in why more young people are becoming involved in cryptocurrency investment. This starkly contrasts traditional investments where middlemen and intermediaries play key roles.
An investigation by the Financial Conduct Authority (FCA) to determine the motivation behind the influx of the younger generation revealed that many young people get involved with cryptocurrencies for emotional reasons. Enjoying the thrills associated with such investments are among the drivers behind the actions of many young investors who have speculated in high-risk asset classes like cryptocurrencies.
Traditional investors, most of whom are in the older generation, are more likely to engage in investment programs for reasons like making their money work for them, or saving for retirement. These are not the drivers that are typically considered by young people when they invest in the digital economy.
Ironically, according to the FCA report, this same category of young investors claims that a significant investment loss would have a fundamental impact on their current or future lifestyle. A chunk of these losses come as a result of falling into the hands of scammers and bad actors in the crypto space.
Recently, about $2.4 million was lost by investors when TurtleDex, a DeFi file storage platform on the Binance Smart Chain (BSC), pulled the rug on them. The funds were drained from trading pools on major BSC DeFi exchanges like Ape Swap and Pancake Swap.
Cryptocurrency Investors Can Now Be Fully Protected
Although the majority of investors in cryptocurrencies allocate their capital without paying close attention to the risks involved, innovative solutions are springing up that help these investors minimize risk. Insurance solutions can help crypto investors protect their investments from the unnecessary risks that many have faced in the past.
Insurance solutions like Insured Finance are designed to suit the highly volatile cryptocurrency industry. They provide safety nets for investors, protecting them from falling victim to some of the associated risks inherent in the cryptocurrency market.
Augur, Nexus Mutual, Opyn are a few of the other insurance solutions that are already in existence in the cryptocurrency industry. Although these platforms also serve users in various capacities, a comparison with Insured Finance exposes their limitations.
Insured Finance covers the risks of cryptocurrency users based on their individual needs. It is a peer-to-peer insurance solution that is fully decentralized and allows individual investors to access insurance cover that is tailored to their unique needs.
This includes exchange hacks, rug pulls, stablecoin failure, and many other risks faced by cryptocurrency users. For instance, Insured Finance users that would have secured cover against the $2.4 million TurtleDEX rug pull would have been immediately compensated after the event.
About Insured Finance
Insured Finance is a decentralized, peer-to-peer insurance marketplace. Built on the Polkadot blockchain, Insured Finance users can request customized insurance on a wide variety of digital assets. Those that fulfill requests earn premiums and can earn a competitive return on their capital. Claims are fully collateralized and settled instantly.
