Top Security Concerns When holding or Accepting Crypto Payment
Many companies are already accepting cryptocurrencies for their products and services, which is already one of the fastest payment methods along with Buy Now Pay Later for example and mobile wallets. So this is the right time to learn about how to accept cryptocurrency payments and how to protect yourself as a business owner with the following best practices.
Who Accepts Payment in Bitcoin?
Microsoft, PayPal, Mastercard, Starbucks, AT&T, and Amazon are just a few of the world’s most well-known companies that currently accept cryptocurrencies as payment. Additionally, up to a third of small firms accept Bitcoin as a form of payment. Although you can no longer pay for your coffee with cryptocurrency at Starbucks, you can however link your Bakkt cryptocurrency app to your Starbucks app and pay from there. So the trend is definitely growing in the number of merchants accepting a form of cryptocurrency, so you should also be already considering this.
How to Accept Payment in Bitcoin and crypto
There are two methods for accepting cryptocurrencies, each with its own set of security concerns. Wallets in the crypto realm are similar to wallets in the real world. That is, they serve as a secure storage facility for your cash. Third-party systems that facilitate crypto transactions are known as cryptocurrency exchanges or payment gateways. Let’s take a look at each one separately, crypto wallets and crypto exchanges.
A cryptocurrency wallet is a software or hardware device that allows you to store and access all of your cryptocurrency. ‘Hot’ wallets are the software version of cryptocurrency wallets. A ‘cold’ wallet gadget can also be purchased (USB stick). To accept a crypto payment, just refer the sender to your wallet’s unique public cryptographic address. Payments may be made via a QR code or by inputting a crypto currency address.
Crypto wallets are self-contained software or devices that do not always require the use of a cryptocurrency exchange to store or receive funds. Choosing a password and obtaining a wallet-generated’seed phrase’ are the first steps in setting up your crypto wallet. The seed phrase can be used to recover on-chain cash if you forget your password or lose your wallet device. However, if you lose or forget the seed word, your coins may be lost for good.
Crypto wallet security issues include:
- The loss of all cash might be permanent if passwords and seed phrases are forgotten.
- Theft or damage to wallet devices or PCs running wallet software may result in loss of funds.
- It is possible to break into hardware crypto wallet still
- Because the transaction takes place solely on the blockchain, payments remain anonymous.
- Phishing attempts persuade users to provide personal information on phony software wallet platform websites. If a hardware wallet is connected, compromising credentials might result in monies being stolen.
- Malware can identify bitcoin addresses kept on a computer and replace them with the addresses of an attacker’s wallet. This causes money to be diverted to the attacker’s wallet.
Seed Phrase Security
The safety of seed phrases is crucial. Imagine having tens of millions of cash in your wallet. Someone may empty your money if they stole your seed phrase. Some people recommend writing it down on a sheet of paper and putting it in a safe deposit box. Others advise encrypting your seed phrase and storing it online. If your credentials are stolen, though, an attacker can access your online files.
What Are Burner Crypto Wallets?
Some people create crypto burner wallets that may be used for a single transaction or a collection of transactions if they are concerned about security. These straightforward, non-technical applications are fully functional wallets that don’t require seed words. Burner wallets are suitable for trade exhibitions, conventions, and even everyday business. After that, the funds may be moved to your primary wallet, and the burner wallet can be deleted at the end of the day.
Cryptocurrency Payment Gateway and Exchange
A cryptocurrency exchange is a digital platform that allows users to purchase, sell, and convert digital money into fiat cash. A web-hosted crypto wallet may also be available through exchanges. You may link your exchange account to your physical wallet or a third-party wallet application on many exchanges. The payment gateway, which is a payment receiving and processing software, is one component of a cryptocurrency exchange.
A cryptocurrency exchange’s key benefit is its ease of use. To receive funds in a crypto wallet, for example, it must be able to accept each form of currency that is being received. So if someone wants to pay you with Ether but your wallet only takes Bitcoin, this transaction will not be possible. Crypto wallets also lack the ability to convert one currency to another. However, exchanges may accept a variety of currencies as payment and instantaneously convert them to another coin or fiat cash. API and e-commerce integration options are also available through exchanges.
Some security concerns associated with crypto exchanges include:
- If the exchange is compromised with malware, the attacker might have access to all of the users’ wallets.
- The assault surface on exchanges is larger. For example, any exchange employee’s credentials might be hacked, exposing the whole exchange.
- Hackers posing as exchange customer service agents could convince clients in giving wallet access
- Governments could sanction any currency exchange if it is deemed not compliant with AML rules and other fraudulent activities
- Crypto exchanges are vulnerable to any software flaws in their APIs or interfaces.
How to Get Paid in Cryptocurrency Safely
The idea is not to deter you from accepting crypto payments, but to be vigilant of possible security vulnerabilities in your process. Traditional internet banking, on the other hand, is also risky as many banks have been hacked with millions of client information being leaked. Strong security should be standard for every crypto platform you use, including encryption and multifactor authentication in all circumstances.
For maximum cryptocurrency protection, a physical wallet is the best option. You could even use a crypto exchange as a burner wallet to conduct daily transactions and then move funds to your cold wallet at the end of the day. Meanwhile, continuous regulatory changes are assisting in the identification of cyber currency threat actors.
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