As a digitally native industry that is focused on trust and real-time transactions, Crypto businesses and their customers, are extremely sensitive to the perils of IT downtime.
Last year, Robinhood was fined $57 million and ordered to pay nearly $13 million more in restitution to thousands of clients – over IT outages. Binance is facing legal claims over a May 19th outage, with disgruntled users seeking international arbitration. And rising crypto star Solana counted six outages in January 2022, frustrating traders and tarnishing the blockchain network’s reputation.
The crypto community must continue to build trust into its foundations. But this trust is threatened by forces they may have no control over – 3rd party IT outages.
Cloud outages and next-gen challenges
Cloud downtime is an ominous threat to crypto. You’ve invested so much in your technology, yet a human error in a data center hundreds of miles away can undermine your entire operation.
According to Parametrix data, in 2021 there was a major outage every 3 weeks, on average. These outages impacted the 3 biggest cloud service providers – Amazon (AWS), Microsoft (Azure) and Google (GCP). They ranged from 30 minutes to 10 hours, affecting millions of businesses across the globe.
For crypto platforms, they prevented customers from trading, swapping, staking and transacting crypto. – leaving millions of traders digitally stranded. But a new cloud downtime insurance product can help mitigate key risks crypto providers face every day.
Promoting resilience through business continuity
When the cloud crashes your platform cannot function as a transaction hub. And when your customers can’t transact, your revenue takes a hit.
Cloud downtime insurance provides cash flow to recover from downtime events and recoup the revenue lost during the outage. It promotes business continuity after the incident is over and service resumes.
An added layer of trust for your customers
Besides lost revenue, one of the biggest casualties of cloud downtime is your reputation.
In a burgeoning industry, customer loyalty can be fluid. Should an outage take out your platform, your customers may seek similar services elsewhere.
To make matters worse, the crypto community is big on sharing their sentiments. Several failed attempts to transact on your platform, and the news will be all over Reddit, Discord, Telegram, Bitcoin Talk and the like.
Cloud downtime insurance provides the funds to offer reparation if your platform fails. It means you’ve got your customers’ backs and are in it – with them – for the long run.
Insure the Uninsured
The crypto industry is still trying to grow its infrastructure and gain mainstream acceptance. One of those base elements is insurance coverage. Many crypto service providers have a hard time obtaining insurance coverages like Cyber to mitigate the risk of malicious attacks.
The Insurance industry is conservative and struggles with the complexities of Crypto. They can’t quantify the risk and translate it into actual policies. Parametrix cloud downtime insurance can fill in this gap with full coverage against interruptions incurred by cloud downtime.
Build resilience and trust
Any way you look at it, when the cloud crashes, you start losing money. There are immediate losses like lost revenue, short term losses, like lost productivity, and long term losses that stem from a tarnished reputation and customer churn.
By acknowledging this, you’re ready for the next logical step – to ensure you have adequate coverage to deal with all the damages of cloud downtime.
Cloud downtime insurance is parametric, or index-based. In other words, it’s a policy with pre-specified payouts that are paid out after a triggered event.
- Coverage is predetermined based on every business’ needs. You define the damages per every hour of downtime.
- Premiums correlate to the amount of coverage you need, along with your exposure (i.e. your cloud provider and the services you rely on).
- If a downtime event occurs, you will get indemnified for every hour of downtime, where the services you rely on were out.
You won’t need to prove any damages (you specified those in advance,) and you won’t need to account for how you spent the money. There is no lengthy or tedious claims process. Just sign a declaration of loss, and payouts are delivered within 15 business days.
Smooth sailing with downtime insurance
Crypto is still in its growth stage. In 2014, the chief executive of JPMorgan Chase called Bitcoin a “terrible” store of value. A year later, New York’s Department of Financial Services began issuing licenses for Bitcoin businesses. And with the total cryptocurrencies market cap reaching US$1.9 trillion by the end of 2021 – the trend is here to stay.