Cryptocurrency and blockchain technology is shaping the future of our economy. It makes traditional systems more efficient, transparent, and safer by removing single points of failure, censorship, and middleman fees. One of the greatest challenges it currently faces is mass adoption. Due to the trustless nature of bitcoin and other cryptocurrencies, transactions are irreversible which means that when an hack or theft occurs, there is no way to recover the funds lost.
Hacks are not usually directed at cryptocurrencies themselves, as there is no central server to hack. Centralized exchanges or wallets, however, do not share this advantage. When you entrust your crypto assets to a third party service, there is much that can go wrong, but there are no guarantees that your funds will be returned in case of a theft or hack. We’ve seen this happen over and over again, with Mt.Gox, Cryptsy, Gatecoin and most recently Bitfinex. Centralized exchanges are dangerous, and despite being other alternatives out there people like them because they are convenient.
Combining blockchain technology with a traditional system, Inchain has come up with a solution for this problem: Blockchain based Insurance. Users can now guarantee their funds are 100% safe using Inchain, an Ethereum based platform that issues and maintains insurances and bonds. Not only does Inchain allow holders to insure their assets, but it also creates new investment opportunities for users that want to buy or trade insurance-based bonds.
When a user gets an insurance policy for their funds, he must first introduce information like the exchange in which the funds are being held and the duration of the insurance, based on his data and the ranking model, the platform creates an offer for the user. After the user accepts the offer and pays the premium, the platform generates a smart contract and the premium is sent to the insurance fund. This smart contract will be equipped with an oracle that montiors weather the insured risks have taken place or not.
After the policy holder is insured, Inchain creates bonds that are connected to that policy and become available for trading right away. These bonds have specific coupon rates, face values, ratings, and durations.
If the insured risk materializes, the smart contract will make a payment out of the insurance fund to the policy holder and the bond holders cease to receive coupons. If not, the bond holders recieve all coupon payments and the bond’s face value.
In order to keep the insurance fund growing, part of it is invested into blockchain and cryptocurrency projects. This fund is managed by the Inchain token holders in a DAO-like environment.
Inchain will host an Initial Coin Offering period that will start October 12th 2016 and will last for a month. During this time, 85 million tokens will be destributed to investors, while 15 million will be kept for core activities. Early investors will be rewarded with a 20% bonus during the first 7 days.