Non-Fungible Token (NFT) Insurance
Non-Fungible Token (NFT) Insurance! What is it? And Can I get it?
What is an NFT?
In the world of crypto Non-Fungible Tokens are the new favorites among investors. NFT, for those not familiar with the asset class, stands for non-fungible token. NFTs represent real-world objects like art, music, in-game items, insurance policies, and deeds. They are built on the blockchain most notably Ethereum, Binance, and Polygon. While physical money and cryptocurrencies are “fungible,” meaning they can be traded or exchanged for one another, NFTs are bought and sold online, like a product and usually paid for with cryptocurrencies.
Can you get NFT insurance?
In a word, yes, but insuring NFT is different from insuring a piece of art in the real world. While insurance for both is relatively affordable month-to-month, the mechanisms in place differ wildly. For starters, not many insurance companies understand or are even interested in ensuring NFTs. So to find an insurer you would need to look to the crypto space.
As of this writing only one company, Shield Coin LLC offers insurance for NFTs, but this coverage is limited to the NFT floor price and the upper limits of coverage offered through Shield Coin LLC’s blanket wallet protection coverage are currently around $3,000. The company does have plans to increase coverage amount in the future, tying the protection to the intrinsic value of the NFT.
Why are NFTs so Expensive?
NFTs derive their value from scarcity. Unlike most digital assets which are usually created with an infinite supply, NFTs operate on the opposite end of the spectrum usually having a very limited supply. In 2021, the NFT market was worth $41 billion, a value quickly approaching the entire global fine art market.
What is the NFT value?
The value of a Non-fungible token (NFT) comes from the fact that they are unique on the blockchain and anyone can verify its authenticity of the NFT. Even NFTs are valuable because they verify the authenticity of a non-fungible asset. This makes these assets unique and one of a kind.