Recent scandals in the wider cryptocurrency industry have added weight to serious skepticism about increased trust in cryptocurrencies, but the reality is that they will not go away. As more merchants consider offering cryptographic services as a means of accepting payments, it’s no surprise that the question arises as to whether cryptographic transactions are secure enough for everyday payments. payment ecosystem has reached a credible point where several existing safety nets prevent hackers and fraudsters from using cryptocurrencies as a tool against merchants looking to bring the crypto generation into their stores. Have to.
Meet cryptocurrency demand at checkout
Many large institutions have already adjusted their commerce strategies to accommodate the provision of cryptocurrency payments. Cryptocurrency integrations for Visa, Mastercard, Square and Paypal now allow merchants to accept crypto payments from their customers. Financial institutions are stepping into the realm of Web 3.0, and several governments are experimenting with their own Central Bank Digital Currencies (CBDC).
Whether consumers are changing their payment habits out of fear of missing out, ‘where people are investing’ or wanting privacy from regulators, paying in crypto In the UK, consumers are already paying with cryptocurrencies, with 1 in 3 UK consumers paying with cryptocurrencies, according to a survey by Checkout.com. (30%) said they intend to use cryptocurrencies as a payment method in 2022, increasing this number to two in five (40%). %) when looking at global respondents. Additionally, her 40% of people aged 18-35 in the UK plan to use cryptocurrencies to pay for goods and services within the next year.
Security is a facilitator, not a blocker, of crypto commerce
Cryptocurrencies are built around data protection. Cipher literally means secret. In practice, consumers can buy cryptocurrencies with fiat currency on cryptocurrency exchanges. But to store, send, and receive crypto, a digital wallet must be used, and merchants must also use a digital wallet to accept payments.
There are two types of wallets: hot and cold. Hot wallets (also known as software wallets) are connected to the internet and are easy and fast to use. Cold wallets (also known as hardware wallets) are stored offline and are less convenient to use, but more secure than hot wallets.
Both types of wallets contain cryptocurrency keys that allow users to access their coins. This includes the public key used to receive funds and the private key used to “sign” transactions and verify that the person owns the public key.
Keys eliminate the need for someone to provide personal information such as email or address when conducting transactions online. This provides additional protection and reduces the possibility of identity theft. The use of blockchain, which underpins most major cryptocurrencies, eliminates single points of failure and creates a tamper-proof record of every transaction.
How merchants can protect themselves
Due to the nature of cryptographic security, transactions are final and irreversible. This is a huge plus for merchants as it reduces the chances of falling victim to fraudulent chargebacks, especially if they operate in the high-risk retail sector.
Merchants can manage risk by monitoring the metadata (public keys) that are tied to every crypto transaction and remain on the public ledger. This allows you to track transactions without having to reveal the shopper’s personal information. Also, the public key makes it easy to identify whether a transaction is fraudulent or genuine.
Crypto payment processors add another layer of protection by employing multiple authenticity checks to spot suspicious transactions. From KYC (Know Your Customer) to KYB (Know Your Business) and KYT (Know Your Transaction), these cross-checks are performed against your customer, your business, and your transaction, verifying all parts of the transaction from start to finish To do.
Prevent scammers from succeeding
All reputable crypto wallets have two-factor authentication (2FA) such as one-time passwords or biometrics. Even if a fraudster gains access to a consumer’s device, including her wallet, the wallet is protected as long as it has her 2FA. Multiple authentication factors improve wallet security. If one authentication factor is compromised, the hacker will have to start hacking again to gain access to the second type of authentication. If the second authentication is a strong password, the hacker’s chances of success are eliminated.
There are also additional technologies in the blockchain space that provide greater protection from fraudsters, such as sharding. Sharding is essentially sharing shards of a private key among nodes, which collectively construct a private key. Multi-Party Computing (MPC) is another development that splits the shopper’s key into separate pieces (based on stakeholder), making it invisible to anyone trying to cheat.
These secure developments will allow merchants to leave their digital currency in their wallets without worrying about compromising security, and to trade with other merchants/wholesalers that accept crypto for better value or accept crypto. Sometimes, crypto can be converted to fiat at a later point in time. .
Challenging Crypto’s Weak Security Perceptions
Despite increased security, more than half (59%) of business owners are still wary of cryptocurrency payments, feeling that cash and credit cards are still the safest options. However, merchants who have started offering cryptocurrency payments find it a much more secure method compared to others. We recognize that it will be much less and will be more profitable.
Clearly, there is a misunderstanding between real and perceived risks, and merchants may be reaching out for no good reason. The popularity of cryptocurrencies will inevitably continue to grow. Merchants will need to offer crypto payments as part of their payment mix, making it essential to know how to navigate the crypto payments space. You are missing benefits such as reduction. Accepting cryptocurrencies can reduce transaction costs and attract more consumers willing to trade digitally.