With Coinbase users recently locked out of their accounts by a power outage and left unable to trade, investors are calling for the cryptocurrency industry to start reimbursing them when things go wrong, says a report by insurance firm Parametrix.
Given Coinbase’s recent woes – and continued volatility in the wider market that saw not-so-stablecoin TerraUSD lose its peg against the dollar this month – perhaps it is no surprise that two-thirds of people who have never used cryptocurrency do not trust the platforms, exchanges, or wallets. But what is concerning for the industry is that more than half of investors themselves report a lack of confidence in its underpinning mechanisms.
Now it appears as though crypto-consumers have had enough. Nine-tenths told Parametrix – itself an advocate for insurance-backed trading of the digital coins – that they would like to see platforms compensate them for outages that prevent them accessing their accounts. And six in ten respondents who had never invested said they might if such measures were adopted.
Moreover, crypto-investors were found to be nearly twice as fickle as traditional fiat speculators, with seven in ten saying they would switch to a different provider or withdraw their funds altogether if they experienced an outage like the one that affected Coinbase last week.
These findings appear to have been echoed by the dismayed reaction among users when it issued an alert on Twitter, saying: “We are aware that some customers are having issues trading and accessing accounts on Coinbase. Your funds are safe, and we are actively working on the issue.”
Soon after, it issued a follow-up statement, declaring: “We’re seeing recovery after implementing a fix, but our teams are continuing to monitor the situation. Rest assured, we will continue our work to ensure our services are healthy.”
But that appeared to be scant comfort for some users, with one tweeting: “Coinbase is not safe! My money is gone and they don’t care! Wallet hacked.” Such individual claims cannot be verified, but the Parametrix report confirms that nearly half of cryptocurrency users have suffered an outage at some point.
The insurance firm, which surveyed more than 500 people ranging from self-professed experts to absolute novices, said it believed that the industry could still prove a valid investment vehicle but called for it to adopt insurance policies to build confidence.
“Cryptocurrency has done nearly everything necessary to provide a safe and accessible alternative to traditional money,” said Parametrix. “But there are still hurdles that need to be overcome before it can gain full trust of current users and attract traditional investors.”
The cloud-based technologies that support crypto-trading also came under fire in the insurer’s report, which found that once every three weeks on average one of the three major providers, Azure, Google, or AWS, experienced an outage of at least half an hour’s duration.
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