Cyber security and cryptocurrency: what you need to know

Whether you mine coins, invest or trade in cryptocurrency, or use digital currency to buy and sell goods and services, good cyber security is paramount. In the first half of 2018 alone, more than £860,000,000 in various cryptocurrencies was stolen in a slew of thefts, from major trading platforms, online or “hot” wallets, and individual devices.

The attractiveness of cryptocurrencies as a target isn’t hard to understand: they are often very valuable and, once stolen, can be tough to trace. There’s also a dearth of good cyber security in the cryptocurrency world, with poorly secured hot wallets and trading platforms making juicy, tempting targets for would-be thieves. The degree of coding knowhow required to attack an online wallet or currency exchange is often very slight, with off-the-shelf malware being more than adequate for many attacks.

While it’s impossible to defend yourself from every possible attack that might come your way, there are plenty of things you can do to protect yourself from thefts. Making yourself a harder target can be enough to deter many criminals; most aren’t looking for a fight, they’re looking for easy pickings.

The most basic step is to use a hard (offline) wallet. This is a small piece of hardware that plugs into your device’s USB port. It holds the encryption keys for the wallet and is very difficult to abuse, even if your device is compromised. There are various types on the market.

If you need to use a hot wallet (for example while trading on an exchange platform), make sure it’s as secure as possible. Always enable two-factor authentication and choose a strong password. Whatever you do, never use the same password across multiple platforms.

Remember that your internet connection itself can be exploited to steal cryptocurrency. This is a particularly big concern if you need to use public internet, such as wifi in airports or hotels, while logging onto your hot wallet or trading site. Using a virtual private network (VPN) counters the threat. A VPN allows you to set up an encrypted channel so that you can send and receive information over the internet without exposing sensitive data (such as passwords and logins for your hot wallet) to anyone else.