June 14, 2021
Show of hands, who has heard of Blockchain? I presume most of us, right? How about Cryptocurrencies aka “Cryptos”? Quite a few, I guess. Do phrases like “HODL”, “To the Moon” and “Buy the Dip” mean anything to you? I know I may be pushing it there, but what if I told you that, at the day of writing this, those phrases represent an industry with an estimated market capitalization of $1.78 Trillion. To put that into perspective, the 86 largest insurance companies in the world, have a combined market cap of $1.87 Trillion while the 40 largest car manufacturers have a cumulative market cap of $2 Trillion. So, how is it that most of us know the likes of Allianz, Cigna, Tesla, and GM, yet Bitcoin, Ethereum and Dogecoin are still relatively inconspicuous and, in some circles, even taboo? This article will try to take up the unenviable task of attempting to “de-crypt” this new epoch of technology and its almost inevitable confluence with insurance.
I beg for your indulgence here since no sober discourse can be had on Cryptos without first understanding their antecedence, Blockchain and Bitcoin, I suggest we start with Blockchain. The mercurial creator(s) of Bitcoin, under the pseudonym of Satoshi Nakamoto, in their now famous Bitcoin White Paper (2008), partly as a reaction to the 2007 economic crisis, created the Blockchain network to be the vehicle behind Bitcoin. Blockchain is described as “a purely peer to peer network” (P2P), a network with no mediation. This network effectively serves the role of a shared or decentralized database that records transactions as a “chain of digital signatures” with each new addition to the chain referred to as a “block”, ipso facto, the block-chain.