Cryptocurrencies have skyrocketed in terms of popularity over the past few years, leading many businesses to explore how they can incorporate the technology into their own business model.
When it comes to using crypto for business and enterprise, it is essential to know the best practices for keeping your digital assets and private information safe. From choosing the right wallet solution to fit your needs, to working with third-party platforms (like Webacy for an extra layer of protection), there are many ways you can ensure the future and safety of your business assets. Businesses can learn a lot about how consumers are protecting themselves and adopt those solutions for larger scale applications like treasury wallets and POS systems that deposit into a business crypto wallet.
In this article, we will discuss the growing use of crypto in business and three of the best practices for using crypto in your own business.
The Growing Use of Crypto in Business
From crypto ATMs at gas stations, and major brands accepting Bitcoin, to festival admittance NFTs and large-scale NFT conventions, there is no denying that cryptocurrencies are reshaping modern business.
In a recent report from Deloitte, it was uncovered that 40% of customers paying with crypto are actually new customers - new customers that are making purchases worth roughly twice the amount of current customers paying with credit cards. Additionally, as of late 2020, more than 2,300 businesses in the U.S. alone accept Bitcoin. Of course, by now, this statistic is bound to be much higher.
Deloitte goes on to describe the two main pathways businesses can take for employing crypto:
- Enabling “Hands-Off” Payments: The hands-off approach to crypto payments involves immediate conversions from crypto to a fiat currency. When crypto is converted in this way, businesses can keep cryptocurrencies out of their financial records and ledgers, relying on a third-party venue to carry out the main task of converting the currencies.
- Enabling “Hands-On” Payments: In the hands-on approach to crypto payments, a business may still work with a third-party vendor but they will play a much more active role in the process. A business can either use a third-party vendor or custodial service to keep its wallet and assets safe, or it can integrate the wallet and crypto into its own digital infrastructure. In the latter, the business is responsible for keeping track of their wallet keys and ensuring the safety of the key.
3 Best Practices When Using Crypto in Business
There are many uses for crypto and other digital assets (beyond payments, such as NFTs), in the world of business. Not only can this technology enable quicker and more seamless transactions, but it also allows businesses to be more innovative with their products and services.
However, incorporating cryptocurrency and other blockchain-based technologies into a business is not without risk. It’s incredibly important to have a strong strategy in place before introducing this technology to your digital infrastructure.
Below, we have detailed three best practices for anyone wanting to incorporate crypto into their business:
1. Prioritize Security
Security is of the utmost importance when you enable crypto payments or other blockchain-based services at your business.
To accept cryptocurrency, you must have a wallet based on the blockchain where the cryptocurrencies you are accepting are located. For instance, to accept Bitcoin, you must have a Bitcoin wallet, whereas to accept Ethereum, you must have an Ethereum wallet.
This wallet is where you will store all of your cryptocurrency payments, as well as any other business-related digital assets you hold. Your wallet is protected by a set of keys — a public key that allows you to accept crypto transactions and a private key that allows access to the wallet itself.
In terms of keeping your keys secure, you have two main types of wallets to pick from: custodial and non-custodial.
With a custodial wallet, a third party will be responsible for your keys, eliminating the need for you to find a secure place to store them. However, this limits the amount of control you have over your wallet and assets, and can also limit the amount and type of transactions you can receive.
On the other hand, with a non-custodial wallet, you will hold the responsibility of keeping your keys safe and privately accessible. While this adds pressure and operational concerns, it also gives your business greater digital autonomy and freedom to accept many types of transactions.
2. Add Extra Safety Measures
Keeping your keys safe is one of the most important security measures to take — but it is far from the only one you can employ.
Adding extra levels of safety to your wallet is essential as a business owner, as these additional security levels can ensure your assets are protected even in the worst-case scenario.
Enterprise use-cases have a much higher risk profile because the equivalent of fiat is a higher value than a typical individual consumer might be dealing with. Even crypto entities like DAOs must look at their treasury wallets similarly to a business use case, like what we outline below.
Here are three examples of extra safety measures to take when using crypto in your business:
- Enable Multi-Sig: A multi-signature wallet (also called a multi-sig wallet) has more than one private key and requires more than one of these private keys to be used to authorize transactions. Not only does this keep your wallet and assets safe in the event of a data breach, but it also makes it easier to use in a business setting where there may be more than one business owner or leader who needs authorization to the wallet. Some crypto wallets for businesses, including Multis, enable multi-sig in their interface (powered by Gnosis), but still keep the wallet non-custodial.
- Use a Backup Wallet: Backup wallets, such as Webacy’s backup wallet product, allow you to transfer your assets from your main wallet in the event of an emergency. For instance, with the Webacy backup wallet, if you lose your private key or have your private key stolen, you can immediately transfer those assets securely into the backup wallet.
- Assign Beneficiaries: Having an official will for your cryptocurrencies and other assets is crucial, especially in the realm of business. If a business owner holds the private keys to the company’s wallet, having a will that determines where those assets will go and who the beneficiaries are is necessary for ensuring the future of your business. Any unexpected event should not derail your business’ ability to interact with its customers financially.
3. Start with Custodial Solutions
If you are new to the crypto space, it may be in your best interest to start with a custodial wallet.
Many major companies offer custodial wallet solutions that seem to be more catered to personal use, but accept business use as well. By using a custodial wallet, you can take more time to learn about the ins and outs of crypto without worrying about the security of your keys.
Custodial wallet solutions give your business the opportunity needed to get familiarized with the technology without putting too much pressure on your team. There are several wallets that are geared towards businesses; Binance and Coinbase for example have business-oriented products – for example, Coinbase Commerce. Moonpay also has easy Hands-off payments that enables credit card payments for digital goods for businesses.
Final Thoughts: How to Begin Incorporating Crypto into Your Business
For anyone interested in incorporating crypto in their own business, the best place to start is by accepting cryptocurrency as payment. This will not only help you learn about the technology, but also help you obtain the foundational resources needed, such as a wallet and third-party security services.
Once you have a better sense of how to use and manage crypto in your business, you can begin branching out into more innovative technologies, such as utility NFTs. A utility NFT is a digital asset businesses can sell that provides access to ticket sales, events, special products, and more.
No matter where your crypto journey takes you, it is important to keep your business’s digital assets safe.
At Webacy, our platform and services are designed for this very purpose. From our backup wallet product, our panic button, to our crypto will services, we have everything you need to successfully incorporate crypto into your business.