Cryptocurrencies have become a popular commodity in recent times. And as a business owner, you’re probably excited about the prospect of digital currencies.
Even if you’re not a cryptocurrency enthusiast or investor, you would do well to take note of these new developments. As sentiments change and the government trust deficit grows, consumers may turn away from fiat currencies.
But the question is, can you trust a crypto wallet for your business needs?
Are Crypto Wallets Safe?
The short answer is yes. However, if you are looking for the best crypto wallets for business there are some things you should have in mind.
Crypto wallets are a safe and effective way to store your digital assets. But you need to be aware of several things, like the types of wallets available, what kind of security is offered, and whether they’re suitable for your business.
So let’s start by looking at the types of available crypto wallets.
Hot vs. Cold Wallets
- Hot wallet
A hot wallet allows you to receive crypto payments from your customers. These are online-only services that are usually available for free. Make sure your crypto wallet is safe, user-friendly, and accepts multiple cryptocurrencies.
Hot wallets give you easy access to your cryptocurrencies and are vital if you want to send/receive tokens.
- Cold wallet
Also known as a hardware wallet, cold wallets are essential to safeguarding your assets. Given how popular (and highly-valued) assets such as Bitcoin and Ethereum have become, hot wallets are often a favorite target of hackers.
Cold wallets are devices that store your private crypto keys offline. This makes them immune to cyber-attacks and allows you to safeguard your assets physically. But keep in mind that a cold wallet connected to a compromised PC can still be hacked.
While hot wallets have come a long way since the early days of crypto, hackers are constantly developing new ways to hack into them. So, if your business regularly deals in cryptocurrency, store the bulk of your assets in a cold wallet.
Characteristics Of A Good Cryptocurrency Wallet
Here are 3 signature characteristics of a good cryptocurrency wallet. Keep these points in mind whenever you’re looking to sign up for a crypto wallet.
- Robust security protocols
Always look into the type of security offered by your hot wallet of choice. Vital features include multi-factor authentication and data encryption. These make it much more difficult for hackers to access your hot wallet and steal your private keys.
Another thing you need to keep an eye out for is whether the wallet is non-custodial. A custodial wallet uses third-party services to safeguard and store your assets.
On the other hand, a non-custodial wallet stores your private keys locally on your device, thus making you fully responsible for the safety of your assets. This system has pros and cons, with some arguing that a non-custodial wallet reduces the risk of a hacker cyber attack.
But at the same time, if you lose your non-custodial wallet’s password, you can probably never re-access your tokens.
- Provided by a reputable company
When choosing a hot wallet, it’s important to ensure that a reputable company provides it with a solid track record.
Keep in mind that there have been many instances of scammers putting out fake wallets to steal your cryptos. After you’ve deposited your keys into the wallet, the hackers will steal them and disappear with your funds.
Besides scammers, some crypto wallets also have the danger of moral hazard. For example, the management team behind the wallet may indulge in dangerous behavior that puts your holdings at risk.
This is why you should only work with reputable companies with a good track record of performance.
- Supports multiple cryptocurrencies
Finally, if you start accepting cryptocurrencies in your business, always ensure that your wallet supports different tokens.
It doesn’t have to be an exhaustive list of assets, but ensure that your business can accept mainstream coins like Bitcoin, Ethereum, Litecoin, and Dogecoin, amongst others. Doing so allows you to cater to a more significant customer segment and makes it easier to receive payment.
The cryptocurrency world can be unstable, so it’s crucial to choose the right wallet for your business. But as with all cryptocurrencies, always manage your risk exposure at all times.