You’ve likely heard stories of how hackers and data breaches are becoming more sophisticated. For that reason, cryptocurrencies have begun to sound more appealing to consumers who would like a safer option for how they do business. Small and medium-sized companies may want to accept cryptocurrency, like Bitcoin, to attract these customers or to stay at the forefront of technology or even as a way to eliminate specific kinds of fraud.
What Is Cryptocurrency?
Knowing what a business has to offer its customers puts a company in a position to gain a competitive advantage — even when it comes down to how customers pay for products. By knowing what sets a business apart from others and being knowledgeable of its resources, a company can forge itself ahead of the competition. Customers have needs and wants, and an organization that is familiar with what they are can implement changes to propel growth and improvement of products and services.
There is a lot of hype concerning cryptocurrency. Although it hasn’t been around for long, business owners who choose to integrate it into their business process could be seizing an opportunity to gain just the right competitive advantage over competitors. But what is it?
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Cryptocurrency is a fully decentralized digital currency, which means there is no monitoring or regulation by a sole authority, such as a government or financial institution. All transactions are like other electronic payments that occur “over the wires.” The funds move between the accounts of sending and receiving users when purchases are made for services or goods.
The public regulates and owns the ledger for cryptocurrencies. However, the identity of the persons pushing the digital funds or making purchases receives encryption by a unique or anonymous set of keys. The sets of keys, private and public, link an individual to an account and the digital currency within.
How Safe Is Cryptocurrency?
The technology that propels cryptocurrency is blockchain. It serves as a digital ledger to record transaction details like the sender, receiver, and amount of the purchase. Every transaction is stored and recorded in blocks that get linked and secured through a method of encryption known as cryptography.
The design of blockchain makes it extremely secure. Each block has a hash — the backbone of blockchain, which is a function that creates encryption using letter and numbers — and a distinctive digital fingerprint of every preceding block. Since copies of the ledger on each network would have to be changed, it is next to impossible to corrupt or alters data once it’s been entered.
At a set, regular interval, a new block gets created through the cryptography. The blockchain is not stored on one server and not managed by any individual entity. This extra layer of security makes it nearly impossible to hack — although further development of quantum computing could one day threaten the ledgers and encryption codes. With quantum machines powerful enough, it could be possible for a group of hackers to figure out the private keys to crack entire blockchains one day.
What Are Cryptocurrency Wallets?
Although transactions made with cryptocurrency are public, the storage of the digital funds is private. Payments are maintained as digital entries to a database online that is secure and only describes individual transactions, and some of the different cryptocurrencies reward you regardless if you don’t move funds by making transactions. People store their currency in a digital wallet.
There are five wallet types. Storage could be in desktop, hardware, mobile, online, and paper wallets. They each provide different levels of security and convenience.
A user would store desktop wallets, along with the private key on a hard drive. Desktop wallets make the digital funds only accessible with the use of the computer containing the drive. These wallets make it necessary to be particularly careful of suspicious files that could contain malware, which makes backing up information critical in the event the computer gets stolen.
An account holder could store a wallet on small external hardware, like a USB stick. This method could be the most secure, as the wallet only connects to the internet during a transaction. It is especially important to keep from losing the device, or else access to the funds stored in the wallet will be lost.
Mobile wallets are convenient because, with the aid of an app, the wallet is within a person’s mobile phone. Like online wallets, the cryptocurrency is stored in the cloud and accessible with internet access. Online wallets are less secure, but mobile wallets remain protected as long as the phone is safe because an unsecured phone leaves the wallet vulnerable to cryptojacking attacks.
Where this falls down is the intersection of cryptocurrency the growth of the Bring Your Own Device movement in business. While there are many advantages to BYOD for businesses, security threats can outweigh them when employees are not properly trained in securing company data.
What Small Businesses Should Consider About Cryptocurrency and Online Security
When building an online business, there are myriad factors to take into account, from target market to social media presence. Because businesses that operate online have the advantage of global reach, one of their primary responsibilities is the security of their customers’ data, especially if that data is financial. And research shows that younger demographics are in favor of cryptocurrency, which broadens a company’s client base exponentially if crypto is adopted.
SMB owners would need to weigh the pros and cons of whether investing in the new technology is right for their business. Hackers often target small businesses, so the fact that no personal data is stored or traceable with any transaction provides both companies and their consumers with anonymity and protection. Business owners can further protect their customers with services like Coinbase, which is a digital currency exchange that ensures losses that are a result of breaches to Coinbase’s cybersecurity, physical security or due to employee theft.
6 Companies Accepting Bitcoin and Other Cryptocurrencies
Accepting cryptocurrency is not the right choice for all small and medium-sized businesses. However, the early adoption of Bitcoin and other currencies by some significant companies could serve as examples of the advantages. Some top companies have broken away from the status quo, perhaps for marketing purposes or to keep up with the changes in the times.
Newegg has popularity within the cryptocurrency community for its purchasing of mining hardware. The hardware allows “miners” to get rewarded for completing blocks of verified transactions with currency that’s added to the blockchain. Newegg sells hardware of all sorts and now accepts Bitcoin for equipment purchases.
Microsoft started accepting Bitcoin in 2014 for its online Xbox Store. For a while, the company stopped taking Bitcoin due to the crypto’s volatility — the fluctuation of its value. Now Microsoft accepts Bitcoin only for Xbox store credits.
Namecheap is a pro-internet freedom company that people use to buy domain names. Many people in the crypto community consider them a favorite because of their willingness to fight for privacy and internet freedom and acceptance of Bitcoin. By sending in Bitcoin, individuals receive credit on their Namecheap account.
Overstock is way ahead in the field of shopping and cryptocurrency. Not only does the company accept Bitcoin, but it also permits transactions with multiple kinds of currency. Many revere the company for its service to the Bitcoin community.
Whole Foods, which e-commerce giant Amazon owns, shocked everyone with the announcement that it now accepts Bitcoin. The company has partnered with the payments app Flexa to complete the transactions. Other notable companies also working with Flexa for Bitcoin payments include Nordstrom and GameStop, among a few others.
CheapAir.com, the online travel agency based in the U.S., began accepting Bitcoin in 2013. Users can pay for flights or hotel bookings using the crypto. At first, the company worked with Coinbase to process the payments, but after pausing the options in 2018 because of custodial reasons, CheapAir.com now accepts payments again through another provider.
Small businesses that want to start accepting cryptocurrency for transactions should first test to see if their customers are interested in the option. With a digital footprint and presence online, business owners already must make online security a necessity to ensure their customers’ information is protected. Adopting cryptocurrency is a sign that companies can make to show they want to provide more progressive ways for customers to be safe when making purchases online.
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Cryptocurrency and Online Security for Small Businesses was originally published in Cryptocurrency Hub on Medium, where people are continuing the conversation by highlighting and responding to this story.