Cryptocurrencies have shaken up the digital world, reimagining how businesses can conduct business — it’s a new global payment system where payments are speedier and more secure. In a new digital age where electronic payment is becoming widely accepted, cryptocurrencies appear to be an attractive solution for international payments.
Christine Lagarde, Managing Director of the International Monetary Fund, endorses the use of cryptocurrency in B2B payments, explaining that it may provide greater efficiency, privacy, and enhanced customer protection.
With no intermediary, such as a bank, cryptocurrency payments are processed much faster than today’s international B2B payments. However, businesses are hesitant to jump on the cryptocurrency wagon because they are not convinced it’s legitimate to conduct business.
Despite this view, there’s no denying the benefits of adopting cryptocurrencies in e-commerce, and here are three reasons:
How businesses can benefit from using cryptocurrencies in B2B payments
- Reduces fraud – the blockchain technology that supports cryptocurrency is a secure system. The distributed ledger technology behind blockchain means that transactions are distributed, and records are verified by a network of computers instead of one party or bank. Additionally, once a transaction is recorded, it cannot be reversed or tampered with, reducing the risk of chargebacks and other fraudulent activities.
- Faster transactions – Cryptocurrency transactions are easy to make, and by far quicker than other conventional B2B payment such as check, wire transfer, or ACH. For example, wire transfers can take up to several days while cryptocurrency transactions have a faster turnaround time.
- Facilitates international payments – Perhaps one of the most significant benefits of using cryptocurrency in B2B payments is the ability to transmit payments globally without the interference of banks or governments. From one country to another, businesses can receive payment directly, without worrying about expensive fees and delayed payment. If done through a bank, it may take days to process a wire transfer or check.
Security risk you should be aware of when storing and trading cryptocurrencies
While there are overwhelming benefits using cryptocurrencies in B2B payments, there are also some risks to consider:
- Unregulated – By and large, cryptocurrencies remain an unregulated form of digital payment with no interaction from central banks or governments and without any insurance or security protocols.
- Volatile – The crypto market is very volatile, allowing for unexpected changes in prices. A sharp drop in the value of cryptocurrencies can happen at a moment’s notice, and investors can lose hundreds and even thousands of dollars.
- Security breaches – Crypto wallets are susceptible to hacking in the form of phishing, ransomware, and other cyber-crimes.
How you can stay protected
Unlike a bank where your money is protected by regulations, as a crypto owner you are responsible for keeping your cryptocurrencies safe. There are a handful of things you can do to secure your crypto wallet, and these include:
- Two-factor authentication – This security measure, also referred to as 2FA, is one of the most important steps to safeguard your crypto wallet and funds. With 2FA, you need two layers of authentication to access your account. In addition to your password, a code is also required, giving an extra security level to deter hackers. The code is sent to your device via text or email and is only valid from a couple of seconds to a few minutes.
- Install a VPN – Another way to secure your crypto wallet is by using a VPN. This is especially useful if you are using public WIFI to access your crypto wallet. Having a VPN installed on your device hides your IP address from prying eyes so you can stay protected when conducting online transactions.
- Strong passwords – Two-factor authentication and strong passwords go hand in hand to strengthen a crypto wallet’s security. A weak password is like leaving your door open to encourage a thief to break in. Crypto wallet passwords should be strong — make them long, unique, and not shared with any other account. Use a password manager if you have trouble remembering the password or write it down on a piece of paper. Remember that losing your password means you will be locked out of your account permanently.
- Separate accounts – Keeping your funds in one crypto wallet is ill-advised. Separate your accounts by having an online wallet and a hardware wallet (also called cold storage). A hardware wallet is more secure as the threat of being hacked is eliminated. As the more secured option, you should also consider storing most of your funds in your hardware wallet, and a small amount in your online wallet only for trading purposes.
- Secure email service – While Gmail or Yahoo might be a natural choice when creating an email to trade cryptocurrencies, they might not be the safest option. Instead, you should subscribe to a secure email service that protects your privacy and does not track your activities. Do your research to find the best secure email solution that suits your needs.
As cryptocurrencies become more popular and increase in value, more businesses may want to explore this virtual payment system as a viable b2B payment option. The associated risks with trading and storing cryptocurrencies warrant concern, but there are ways to work around it by taking the necessary steps to protect crypto wallets.