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Challenges and Solutions for Using Cryptocurrency in Business Operations

#Web3 Service#Blockchain#DeFi#Security
2024-06-04
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After evaluating whether to integrate Web3 technology into operations, let’s imagine a scenario where, as a business, all payments and receipts are processed through virtual assets and cryptocurrencies. What would that look like?

Current Analysis of Cryptocurrency Operations in Enterprises

In recent years, an increasing number of companies have started experimenting with cryptocurrency strategies. This includes many Web3 startups and tech companies, as well as some traditional mid-to-large enterprises exploring the feasibility. Well-known companies like Tesla and MicroStrategy have publicly announced the inclusion of specific virtual currencies in their financial statements. According to surveys, by the end of 2022, over 2,000 U.S. companies worldwide accepted Bitcoin payments. These companies view cryptocurrencies not only as a payment tool but also as an investment and operational asset, highlighting the rising trend of using cryptocurrencies in daily operations.

Why Should Companies Consider Cryptocurrency Operations?

Adopting cryptocurrencies in daily operations offers many advantages, making it an attractive option:

  1. Low Transaction Fees

    In traditional financial transactions, companies often incur high transaction fees from centralized institutions like banks, third-party payment providers, or systems like SWIFT. The decentralized nature of cryptocurrencies, along with continuous advancements in blockchain technology, significantly reduce transaction costs, usually ranging from 0.4% to 1%. This means companies can save significantly on transaction costs by using cryptocurrencies, thereby increasing operational profit margins.

  2. Instant Cross-Border Transactions

    The global applicability of cryptocurrencies allows for transactions beyond national borders without high processing fees or delays. Traditional foreign exchange or cross-border transactions often take one to several days due to multiple intermediary institutions. By using cryptocurrencies, companies can improve operational efficiency and reduce the risk of delayed fund flows.

  3. Decentralized Transactions

    Without centralized institutions controlling transactions, the decentralized nature of cryptocurrencies provides companies with greater freedom and autonomy. Central banks and governments control the supply and transactions of traditional currency, which limits the flexibility of companies in utilizing funds. The decentralized structure of cryptocurrencies eliminates the need for intermediary institutions and is maintained by participants on a distributed network, reducing the risk of single-point failures. Companies can more flexibly plan asset applications and transaction activities without central scrutiny and restrictions.

Major Challenges of Cryptocurrency Operations in Enterprises

In our article, "Web3 Business Operations: Future Trend Or Current Necessity?," we explored the challenges enterprises face in developing Web3-related businesses. Let’s delve into the issues that need to be overcome when expanding to daily operations:

  1. Transaction Security Risks

    Currently, there is no single platform that perfectly addresses the security inadequacies of using cryptocurrencies for transactions, especially in terms of hierarchical transaction review processes. Many solutions lack multi-level transaction review and authorization management, exposing companies to risks such as operational errors and misuse of transaction authority. Although some solutions offer "multi-signature" functionality to mitigate this issue, these service providers often charge high management fees or tend to serve large enterprises. However, in a well-controlled company, a hierarchical transaction review process is necessary to provide clear responsibility distinctions in case of security incidents.

  2. Asset Liquidity Risks

    There are numerous types of cryptocurrencies, most of which are highly volatile. When allocating assets in cryptocurrencies, companies should first distinguish whether the assets are held as investment tools or operating funds. For operating funds, holding assets with high price volatility makes it difficult for companies to maintain stable cash flow in daily operations, posing a risk of capital shortage. Additionally, the valuation of assets on financial statements may lack legitimacy.

  3. Impact on Corporate Accounting

    The current international accounting standards do not treat cryptocurrencies as equivalent to currency, and their nature is complex, making accounting and tax treatment different from traditional currency. When dealing with cryptocurrency transactions, companies need to accurately record their fair market value and perform detailed account tracking. Proper asset valuation definitions are required to ensure the accuracy and compliance of financial statements.

Challenge Solutions for Cryptocurrency Operations

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Multi-Level Transaction Control

In the AssetPro module of KryptoGO Studio, we have established a multi-level approval transaction management system to meet the needs of companies of different sizes. By decentralizing operator permissions, we ensure that every transaction undergoes thorough internal scrutiny, effectively preventing operational errors. In our system, managers can allocate transaction quotas for different authorization roles, ensuring that personnel at each level can only operate within their authorized scope, preventing abuse of authority.

Support for Stablecoin Applications

Facing the volatility of cryptocurrencies, stablecoins backed by physical assets or pegged to fiat currencies offer relatively stable prices. Whether used as operating funds or further traded as investment tools, they are a priority for companies to hold. Our AssetPro and wallet applications support multiple stablecoins, allowing companies to directly manage their cryptocurrency assets through KryptoGO Studio and reduce risks brought by price volatility. Additionally, companies can achieve global instant transactions without paying high handling fees or waiting for TradFi processing time, improving operational efficiency and reducing cash flow delays.

Complete Transaction Record Tracking

To ensure that companies accurately record every transaction when processing with cryptocurrencies, KryptoGO Studio's AssetPro provides comprehensive transaction recording functionality. The system automatically records detailed information of each transaction, including time, counterparty, amount, and transaction type. These records can also be reconciled with the risk review results from our Compliance module, facilitating financial auditing and compliance management for companies.

Conclusion

While adopting cryptocurrencies as the main payment and transaction tool in operations brings many advantages, such as reducing transaction fees, achieving instant cross-border transactions, and decentralized trading, companies also face numerous challenges in the process, including transaction security, asset liquidity, and complex accounting handling.

KryptoGO Studio provides comprehensive solutions to address the pain points companies encounter in cryptocurrency operations, offering flexible, efficient cryptocurrency management tools and comprehensive risk management and compliance support. We help companies steadily advance on the path of fully adopting cryptocurrency operations. Whether your company is undergoing Web3 enterprise transformation or is already an established Web3 startup, KryptoGO Studio can provide tailored solutions to help your company achieve greater success in this rapidly changing era.

We believe that with continuous technological advancements and the gradual maturation of the market, fully adopting cryptocurrency operations will become a choice for more and more companies.

Learn more about KryptoGO Studio and start your cryptocurrency operations journey now →