Bitcoin, today, is a mainstream investment asset. For years already, the cryptocurrency has been at the center stage of financial media and retail investors of all demographics have long since started to include it in their investment portfolios. Now, with 24-hour trading volumes reaching new heights, institutions are starting to get interested.

Indeed, dozens of large, publicly-traded, companies, such as Microsoft, Visa, Mastercard. Overstock, and PayPal have crypto exposure. An inestimable number of privately-owned businesses are getting into cryptocurrency as well.

Why businesses are investing in Bitcoin
While lots of great cryptocurrencies and cryptoassets exist today, businesses are, for the most part, continuing to focus their investing on Bitcoin. This is for a few key reasons:

First, Bitcoin functions as an excellent store of value, already superseding gold and other precious metals by some metrics. Second, the cryptocurrency, together with the upper-level lightning network, forms the core of a fantastic cross-border payments system. Third, it serves as a gateway to the rapidly expanding world of decentralized finance (DeFi), which is already providing businesses with billions of dollars of added value each year.

What should your business do to get started with Bitcoin?
In this blog post, we provide an outline of the steps your company should take to begin investing in cryptocurrency, and most particularly in Bitcoin. Of course, nothing is ever as simple as "just a few easy steps," but we hope this guide will at least get you and your team asking the right questions!

Bitcoin is an "on-chain" asset. This means that it is issued and traded on a blockchain, a kind of decentralized network (we have already defined blockchain tech in more detail here). Blockchains are by definition disconnected from centralized, "off-chain," banking systems, such as the one that issues your local currency. In order to purchase - and later sell - Bitcoin, therefore, you need to find a way to transfer your "off-chain" funds onto the network. Cryptocurrency exchanges serve this purpose.

What is an exchange?
Exchanges are businesses that allow users to purchase and sell cryptocurrencies, including Bitcoin, using fiat currency and digital assets. Every day, millions of dollars worth of crypto are traded using exchanges, which over the last decade have developed into reputable financial institutions that are required to comply with regulatory requirements in the jurisdictions where they are registered.

Why might your business need an OTC exchange?
While cryptocurrency exchanges have certainly become reliable over the last few years, it may be worthwhile for your business to choose to take advantage of another kind of crypto-financial service: an OTC exchange.

Over-the-counter (OTC) exchanges (also called 'crypto brokerages') carry out a more bespoke service than do regular trading platforms. In doing so, they provide three primary advantages: liquidity, discretion, and flexibility.

Liquidity
Oftentimes, even the biggest, most popular, cryptocurrency exchanges have trouble filling large orders. When this occurs, the exchange is forced to split the large order into smaller, sub-orders, which are carried out one after the other. It is unrealistic to expect the price to remain stable during this process. Businesses that are taking significant positions, or that are attempting to withdraw a great amount of funds, risk losing a lot of money to slippage.

OTC exchanges have more tools at their disposal than do other crypto-financial institutions to solve this liquidity problem. They can often find a single counterparty for your trade within their own network, thereby setting a guaranteed price and eliminating devaluation risk over the course of the deal. For the largest Bitcoin purchases, OTC exchanges are really the only way to go.

Discretion
Large operations that are carried out on traditional crypto exchanges can be very easily tracked. In business, there arrive situations, though, when professional discretion is preferred. Since OTC exchanges act as your business' agent, the execution of your trade will not immediately be able to be linked to your company.

Flexibility
OTC exchanges are usually quite flexible in terms of supported currencies, as well as of payment and withdrawal methods. Furthermore, as crypto brokers, OTC desks tend to deal with fewer trades and have time to provide you with personalized service. For example, they can likely help your business prepare the documentation that may be required in your jurisdiction.

How to set up a corporate exchange account
The exchange onboarding process for businesses is a bit more involved than for individual crypto users. For compliance reasons, exchanges are required to carry out a good deal of due diligence for each new corporate client. Fortunately, good, client-oriented exchanges (like ALTERXE) have personnel who are ready to guide you through this process.

In order to set up an exchange account for your business, you will need to submit a number of documents that attest to your company's incorporation, structure, and registered address. The list of required documentation will likely resemble the following:

1. Certificate of Incorporation
   
2. Articles of association
   
3. Business register information that lists current directors and shareholders.
   
4. Certificate of good standing
   
5. Proof of business operating address (bank statement, lease agreement, utility bill, etc.)
   

So you've got your account set up on a crypto exchange - great! Now's the time to place an order.

Transfer your funds
Since you have on-boarded to a licensed exchange, depositing funds into your account should not be an issue. You will be able to transfer the funds right from your bank account, using systems like SWIFT, SEPA, or BACS.

Market Order, Limit Order, or OTC?
When buying Bitcoin using your exchange account, you will be faced with the decision of making a market order, a limit order, or carrying out an over-the-counter (OTC) trade. Each has their own advantages and disadvantages.

When you make a market order, you agree to purchase Bitcoin at the current market price. You just enter the amount of Bitcoin you wish to purchase and hit "buy." The advantage, here, is convenience. However, this kind of order is inappropriate for larger orders, as your exchange will first purchase a batch of coins from cheaper sellers, before moving on to more expensive ones. In the meantime, the price may increase.

A fixed price can be obtained by submitting a limit order. In this case, you indicate the price at which you are willing to buy Bitcoin. The obvious disadvantage, here, is that market prices may increase, leading to your order never being fulfilled.

OTC trades are usually the best option for large orders. As explained above, these kinds of trades ensure a fixed price while maintaining professional discretion for clients.

What fees should you expect?
When buying Bitcoin, you should expect to pay a service fee to your exchange or brokerage, a network fee to the Bitcoin blockchain, and a payment processing fee.

Service Fees
Service fees are charged by exchanges and brokerages. Charged as a percent of the amount you deposit into your account, this fee covers the various solutions that the exchange provides, including executing trades, customer support and OTC deals.

Network Fees
All blockchain networks, including the ones that issues Bitcoin, collect fees on transactions, which are rewarded to miners who verify transactions. In basic terms, this money covers the security of every blockchain transaction. The exact fee depends on a number of technical factors and regularly changes. Many calculators (such as the one here) are available online to help estimate costs.

Payment Processing Fees
When you deposit funds into your exchange account, you will be required to pay a fee by your payment processor. These fees vary between financial institutions and depend on the kind of transfer that is carried out.

After your trade has been completed, your newly purchased Bitcoin will be sent into your exchange account. What you should do next with your coins really depends on your company's investment goals and crypto custody strategy.

Where should you store your Bitcoin?
There are two main ways by which crypto investors generally store their assets: on their exchange accounts (third-party storage) or on an external software or hardware wallet (self-custody). Both storage methods have their merits and faults.

Exchange Account (3rd Party Custody)
Most cryptocurrency exchanges have crypto storage facilities - an account into which any Bitcoin or other crypto asset that you purchase will be deposited. Also referred to as "exchange wallets," these accounts can be accessed by entering a username and password into the exchange's website or mobile application. Some exchanges also feature 2-factor authentication (2FA) capabilities.

Many retail users and some businesses choose to keep at least some funds on their exchange accounts at all times. These coins and tokens are always accessible and easy to trade whenever the need arrives. For businesses, some exchanges offer unique capabilities that facilitate easier accounting of cryptocurrency stored in their accounts.

Advantages

1. Rapid access to funds: Your cryptocurrency is ready to trade at all times by just entering a username and password.
   
2. Multi-platform: No need to head home to get your crypto key. Make trades and payments on your smartphone, tablet, or PC.
   
3. Business interfaces: Many corporate accounts include features that simplify business operations.

Disadvantages

1. You must trust the exchange: In theory, the exchange could go out of business, get hacked, or have technical issues. This could lead to the loss of your funds.
   
2. Chance of user error: Somebody in your business must be held responsible for the security of your exchange account login information.

Keeping funds on an exchange account might not be the safest available solution. Owing to ease-of-access, though, it is probably the best way to store cryptocurrency short-term. If you expect to need to carry out payments in the near future, it is probably a good idea to maintain a balance on your exchange.

External Wallet (Self-custody)
For larger sums of Bitcoin (and other cryptoassets) that are intended to be held long-term, it is recommended to maintain a software or hardware wallet. Both of these kinds of wallets are different ways of storing private keys - the cryptographic "password" to your money. Software wallets are applications that you install on your PC or mobile device and which provide a user interface to manage your funds. With software wallets, keys are stored locally on your device. Hardware wallets provide the same kind of UI while storing keys on specially designed, cryptographically-protected, devices.

We generally encourage businesses that invest in Bitcoin to purchase one or multiple hardware wallets. While software wallets are free, the added value of the 75-150 GPB hardware device, in our opinion, is worth it. Hardware wallets are invulnerable to malware and keep your data offline at all times.

Advantages:

1. Always under your control: Manage your wallet keys on your terms and always have access to your funds.
   
2. Backups: Create and store backup seeds in multiple locations to attain greater security.
   
3. On-chain: Balances can be checked and accounted for using blockchain explorers.

Disadvantages:

1. One extra step: When making trades via an exchange, it's necessary to send funds from the wallet to the exchange. This takes time and implies a network fee.
2. Your wallet, your responsibility: If backups are not stored correctly, access to funds can be lost.

How should you strategize your business' Bitcoin custody?
Having to be responsible for wallet keys will likely be a new experience for many of your team members. With a well-thought-out strategy, thought, your company's crypto transformation can only go smoothly.

The first thing to remember is that crypto custody is not significantly different from other kinds of data security. Your IT department stores source code using many of the same techniques you will use to store your Bitcoin. Secondly, it is essential that you create an effective system of wallet backups. Multiple backups for multiple wallets can be stored in secure locations like bank vaults. Legal documents can be written and signed that specify who has access to these vaults.

Finally, for many operations, it is possible to require multi-signature authorization. Just like how transactions from your corporate bank account can be set up to require authorization by certain individuals, wallets can be set up to require the digital signature of particular stakeholders.

Cryptocurrency's role in the world economy with time is only set to grow: perceptions of assets like Bitcoin are constantly becoming more positive, both from the perspective of the public and the government. That said, it is still - and always will be - essential to make doubly sure that your Bitcoin operations are fully transparent to your team, to the authorities in your local jurisdiction, and to your company's stakeholders.

File your taxes with ease
Over the past couple of years, a number of specialised platforms have launched that streamline the tax-filing process for businesses that deal with cryptocurrency. These platforms are able to automatically track your trades and withdrawals and report all necessary information to your local tax authority. Among these SaaS platforms are such well-known names as Gilded, ZenLedger, and TaxBit.

Keep stakeholders up-to-date
Crypto is still a fairly new technology, and it is to be expected that some of the people involved with your business will feel a little weary. In our experience, the best way to win over these kinds of 'cryptocurrency laggards' is to educate and to be transparent.

The education side of things is easy - just send them over to our Knowledge Base! Transparency, though, might be even easier. Show your stakeholders how to track your company's cryptoassets using blockchain explorers, such as the one at https://blockchain.com. With time, they'll see for themselves that cryptocurrency really is a better way to do business.