three men sitting on chair beside tables

The term cryptocurrency is gaining momentum in our day-to-day lives. One can hear about it in tech forums, on news channels, or read about it when taking the morning paper in front of their door. Check for more info.

The bitcoin price has started to rise exponentially since early 2017. It has reached all new highs, making some millionaires and giving hope to those who still believe in its potential.

Bitcoin is slowly pushing into the financial industry and reshaping it, but that is not where cryptocurrency influence ends. The insurance industry in Germany can benefit from cryptocurrencies as well.

7 Positives of bitcoin that benefits insurance industry in Germany:

1. Transparency:

As all transactions are stored in a public ledger called ‘blockchain,’ it is easy to check the correctness of an insurance claim and whether someone is trying to manipulate it. Further, no funds will be transferred without defined conditions being met because of built-in mechanisms such as escrow accounts and smart contracts.

2. Costs:

The lack of a third party reduces operational costs by decentralizing services significantly. This also offers a chance to get rid of expensive intermediaries such as banks or notary offices in processes such as insurance claims.

3. Accessibility:

Anyone can open an account with only a few clicks, while traditional insurance brokers need to assess the applicants’ financial standing before giving them policies. Some platforms offer information on whether someone is good for the payment or not by using credit scores. Still, this method doesn’t consider a person’s potential, just their past spending behavior.

4. Trust:

Trust is one of the essential aspects of sharing sensitive information such as bank accounts and private keys. Blockchain technology creates unprecedented transparency in this domain by adding all transactions to the public ledger and linking them together in a chain (hence the name blockchain).

This way, everyone can see any changes made to the shared data in real-time.

5. Mobility:

This feature currently has minimal use, but it can be potentially valuable in the future. For example, transferring money without borders or intermediary banks is a convenient feature of moving funds from one place to another. Additionally, this possibility will also reduce the cost of transferring money.

6. Availability:

Platforms such as Ethereum offer a wide range of services that can be used to create decentralized insurance applications via smart contracts, making it possible for people from all over the world to get their service or make a transaction through the Internet only.

7. Customizability:

People can order their policies in cryptocurrencies instead of fiat money, allowing them to choose the specific amount they want to insure. This is especially important for small businesses that cannot afford to spend extra money on insurance because of already high premiums.

5 Negatives of bitcoin that affects the insurance industry in Germany:

1. Volatility:

Bitcoin is known for its rapid and significant price fluctuations, making it a hazardous investment. The same volatility applies to other cryptocurrencies, making taking out an insurance policy quite unpredictable.

For instance, the value of 1 bitcoin (which was around $5,000 at the time of this writing) can increase to $10,000 within a week, but then drop to half of its value in the next if there are no significant changes in its market. This makes it hard to set up contracts between different parties using cryptocurrencies.

2. Limited use:

Most service providers do not accept payment with bitcoins or other cryptocurrencies. This makes it difficult to pay for services using this digital currency, especially when it is time to claim insurance.

3. No protection:

There are currently no laws that protect people who get scammed or tricked while using bitcoins or other cryptocurrencies on unregulated websites or exchanges. If someone obtains both customer’s money and private keys, no one can guarantee that the funds will be returned.

4. No regulation:

None of the cryptocurrencies is regulated by any government, making it even more challenging to solve disputes with their users or provide claims services. It also makes it harder to control cryptocurrency exchanges due to a lack of transparency.


Bitcoin and other cryptocurrencies are still in their early stages of development, so it is too early to say that they will never replace traditional currencies.

Even if this technology doesn’t come up with a solid solution shortly, it can still affect the insurance industry by acting as an alternative payment method or helping governments develop their cryptocurrencies.