Blockchain companies have been around longer than you may think. The concept for blockchain technology was founded back in the 1990’s, although they have dramatically gained in popularity in just the last 10 years. Bitcoin may be the most commonly known form of a blockchain company.1
This technology is actually expected to be worth over 20 billion in the year 2024 according to dotcominfoway.com.2 That’s a long way to go in just a few years!
So what is blockchain technology? It basically decentralizes the systems we have used our whole life. For example; when you purchase something off the internet you may use your credit card to complete that transaction. Once you have made the purchase, the funds are then transferred through several other companies who all take a piece of the transaction until it is complete. 3
Blockchain technology gets rid of the extra steps and the pieces being taken away. You make a payment and it’s done. No one else needs to ‘process’ anything. This leaves more possibility to you as it has simplified the transaction.
Chad Bennett is the successful founder of HEROIC.com. It is a company that successfully uses the blockchain technology. He shares with us his next great business idea that uses blockchain technology in a way it hasn’t been used before.
Bennett suggests that blockchain technologies need to be spread to the insurance companies. The way insurance companies currently work is a very archaic system. Especially when you think of the assets blockchain companies have created. There’s no real standard suggesting how to cover these things.
Think about how your insurance company works:
You apply to be covered for insurance. Your application goes to someone who looks it over and sorts it, passes it onto the next person who looks it over, and sorts it even further, this continues until the underwriting has occurred and it is then transferred back through several hands down to you where they give you an astronomical amount to cover for payment.
But what if we’re talking blockchain assets like bitcoin? How does one insure that?
The way insurance companies work right now isn’t geared toward how they will be working in the future with more and more blockchain companies needing to secure their assets. Current insurance companies operate on such a system that blockchain assets haven’t really been entered into the equation.
Bennett further suggests if we eliminate the middlemen in some of our transactions we might be able to find a better solution.
Current insurance companies have a widely interpreted rating system for coverage. A more specific rating system would help eliminate the need for the middle man.
The middle man is essentially needed to develop trust. The middle man is working for you and the other party. Keeping both interests in mind and finding middle ground if you will. If a specific rating system for blockchain assets were created the middle man could be cut out entirely.
Keep in mind that a beautiful perk to most blockchain companies is full transparency. Because blocks are so interconnected, it is hard to alter the system without several other systems being alerted. Thus a specific rating system helps ensure things are crystal clear for all the parties.
What would one need to start this blockchain insuring company? Suggestions include:
–Time will be one of the biggest resources you need. Developing good technology will take a significant amount of time to get it right. Also developing a specific rating system will need to be thorough and detailed to ensure that the middle man won’t be needed.
–Resources including funds are a big hurdle. Bennett estimates that at least $10 million will be needed in order to fund the proper programs and processes.
–Networks are something to seriously consider. Insurance companies are HUGE and will laugh at a start-up coming in to take over the cyber world. Developing a consortium of insurance companies will not only help alleviate costs, it will make you a bigger more serious contender when going up against the age-old insurance companies.
The hardest part of setting up this new system won’t be the initial startup, but rather integrating into the current insurance system. While this won’t and shouldn’t replace the current insurance system, it is certainly needed to insure cyber assets.
Goyal, Swati. (2018, November 3). The History of Blockchain Technology: Must Know Timeline. Retrieved from https://101blockchains.com/history-of-blockchain-timeline/
Raja. (2019, May 14). Blockchain Infographic: Growth, Use Cases & Facts. Retrieved from https://www.dotcominfoway.com/blog/growth-and-facts-of-blockchain-technology
Verhelst, Jean Luc. “Blockchain for Dummies-Part 1-Introduction to the very basics”. YouTube, December 27, 2016, https://www.youtube.com/watch?v=5BGCKkgW8CU