A growing number of companies are using digital assets for a variety of investment, operational, and transactional purposes. As with any new technology, there are risks involved, but these can be mitigated by implementing secure systems and practices in any area of a business that uses crypto. Thousands of U.S businesses now accept bitcoin, and that excludes bitcoin ATMs. Rapid adoption can be expected to continue and following best practices (in terms of security and efficiency) will maximise the chance of a successful implementation of these technologies into traditional businesses. Some of the reasons why traditional businesses are adopting crypto are listed below:
- Crypto provides a new way to trade and send currencies. Bank fees and slow processing times can be avoided by using the blockchain. This is often especially attractive for large international payments and high-risk industries.
- Counterparties may start making transactions in crypto and require that a business adopt this as well for payments.
- In jurisdictions where it can be hard to source USD, stablecoins like USDT and USDC offer a convenient way to maintain purchasing power versus emerging market currencies.
- Crypto has become a popular investment vehicle for businesses as well as individuals in recent years, with companies both small and large adding digital assets to their balance sheets.
Implementation of crypto
Once a need to utilise the benefits of crypto has been established the question then becomes one of implementation. In most cases a third party is the preferred way to manage crypto functionality within a traditional business. The operational, regulatory and security aspects of using crypto are usually not best served in-house and therefore external solutions become the logical next step. Custody solutions like Fireblocks provide security for holding assets. Crypto payment specialists like us here at Damex have built efficient operational processes to convert and transfer crypto, and of course any entities interacting with traditional businesses need to be regulated in the correct jurisdictions. These are large hurdles to overcome without experienced help and in many cases the only answer is to go to a reputable third party.
The advantages of external solutions are multi-faceted. Custody is taken care of so there is no need to deal with the storage of private keys for hard wallets. Trading is done by professionals who can source deep liquidity and quote all-in prices. Compliance processes that have been battle-tested and approved by regulators are in place to stop any threats or illegitimate transactions. These are all highly desirable traits and as the crypto payments industry grows they will become even more important. As volumes grow risk does as well, meaning strong procedures are going to be relied on more heavily over time. Smooth rails for fiat in and out of the crypto market are going to be the bedrock of the next stage of growth for digital asset adoption, particularly with significant regulation from the U.S on the horizon in the wake of the FTX collapse. The well regulated and the well managed will thrive. The future for the rest is on shaky ground.