What is crypto security and how it works

Understanding crypto security

Cryptocurrency is starting to redefine how value is stored and transferred, as it bypasses traditional financial intermediaries in favour of decentralised networks like Bitcoin, Ethereum and Solana.

At the heart of these networks lies blockchain technology, which is a distributed ledger system that proponents argue records transactions both immutably and transparently. While blockchains themselves are inherently secure due to cryptography and consensus mechanisms, the broader ecosystem surrounding them — including wallets, exchanges and user behaviour — is not immune to security threats.

Crypto security is therefore the implementation of measures aimed at mitigating the risk of unauthorised access, fraud, and loss related to digital assets, access credentials (especially private keys), and user accounts.

Since many crypto transactions are irreversible and anonymous, users do not have the same legal or institutional protections they might expect from banks or payment processors. Once assets are lost or stolen, recovery is often impossible.

Therefore, understanding the risks, ensuring you have strong safeguards and staying updated with the latest crypto security advancements, are all essential for anyone engaging with this new alternative asset class.

How to invest in crypto with us

1. Open an account online or download our IG Invest app. From there, you’ll be able to access the cryptocurrency market through our platform. 
2. Learn more about how the cryptocurrency market works and choose a coin to research.  
3. Build a trading plan that aligns with your personality and risk appetite. 
4. Search for your desired coin on our web platform or app. 
5. Choose your position size, then open and monitor your investment.

Remember that past performance is not an indicator of future returns, that the value of investments can fall as well as rise and that you could get back less than your original investment.

If you want to test out your strategy first without risking real capital, consider our demo account where you can practice your cryptocurrency trading tactics with virtual funds.

Uphold security 

We partner with digital finance platform Uphold to maintain the highest standards of crypto security. Unlike many platforms that treat security as a feature, Uphold embeds it into every operational layer — from engineering to user education.

At the core of Uphold’s approach is its Security-First Architecture, which includes multiple layers of defence. All data is encrypted both at rest and in transit using robust protocols including AES-256 and TLS 1.2+. Access to its systems and databases is tightly controlled through role-based permissions, with sensitive operations requiring multiple signoffs.

To defend its network, the platform works with firewalls, intrusion detection systems and continuous vulnerability scanning. Additionally, regular penetration testing is conducted by third-party experts who simulate attacks and identify vulnerabilities, to make sure that it stays ahead of emerging threats.

A 24/7 Security Operations Centre monitors the system around the clock, using machine learning-powered anomaly detection to identify and respond to unusual activity in real time.  And Uphold also sports a community-driven security model through its bug bounty program in partnership with Intigriti, where ethical hackers are rewarded for discovering any potential vulnerabilities.

Uphold has also developed proprietary technologies including Reserveledger and Reservechain, which allow users to verify in real time that their assets are fully backed 1:1 by corresponding reserves. This auditability ensures Uphold cannot lend, leverage, or mismanage user funds without detection. Additionally, third-party audits continually validate its financial solvency and operational controls.

From a regulatory standpoint, Uphold aligns with international standards by complying with key financial regulations. It is an Electronic Money Distributor (EMD) Agent under the Financial Conduct Authority (a business authorised to provide electronic money services on behalf of a licensed Electronic Money Institution), while its KYC/AML processes help to prevent illicit activity.

Uphold also meets leading industry certification standards, including SOC 2 Type 2 for data handling, ISO/IEC 27001 for its information security management system and PCI DSS compliance.

Common threats

The decentralised and largely anonymous nature of crypto makes it a popular target for cybercriminals. Understanding the potential threats is crucial, as it allows you to defend yourself against the most common problems:

• Phishing attacks — cybercriminals can impersonate legitimate platforms through fake websites, emails or social media accounts to trick users into revealing their details. They can be very convincing, and can even mimic wallet interfaces or customer service agents
• Malware and ransomware — some attackers install spyware to intercept passwords. In more extreme cases, ransomware encrypts a victim’s data and demands payment (typically in cryptocurrency) to unlock it
• Exchange hacks — even major platforms with strong reputations have suffered security breaches, with some losing hundreds of millions of dollars in user funds. Assets stored in exchange wallets are only as safe as the exchange’s security infrastructure
• SIM swapping — this involves tricking your mobile phone service provider into porting your phone number to a new SIM card controlled by the attacker. Once they control your number, they can intercept 2FA codes and then reset account credentials, compromising your crypto accounts
• Social engineering — cybercriminals often use psychological manipulation, including pretending to be a trusted individual or authority figure, to persuade victims to disclose sensitive information or transfer their funds
• Rug pulls and scam projects — scams are not always about hacking. In a typical rug pull, developers launch a token, hype it through social media, attract investor funds, and then disappear leaving behind worthless assets

Wallet security 

In the world of cryptocurrency, wallets store your private keys — which comprise the cryptographic credentials that grant access to your assets. Without them, you can’t manage or transfer your crypto, so understanding the different types of wallets is crucial.

Hot wallets are connected to the internet, making them very convenient but more vulnerable to cyber threats. These include mobile wallets like Trust Wallet, or browser extensions such as MetaMask alongside web wallets provided by exchanges. Because of their internet connectivity, hot wallets can be susceptible to phishing attacks, malware and exchange breaches.

Cold wallets are offline and reduce exposure to online threats, offering enhanced security compared to internet-connected wallets. These include hardware wallets like Ledger and Trezor, which store your private keys in a physical device not connected to the internet.

This is ideal for long-term storage of significant crypto holdings and offer a further security measure against online attacks, though they do come with their own set of risks if not physically stored securely.

You should always back up your wallet’s seed phrase and store it offline in a safe, physical location. It’s best practice to never share your private keys with anyone, while also using a reputable password manager to generate and store strong, unique passwords, and enabling two-factor authentication on all related accounts.

By understanding how wallets work and adopting these security habits, you can dramatically reduce your risk of loss.

It’s worth remembering that one of crypto’s key advantages is self-custody, but this benefit also comes with heightened personal responsibility.

Risk-aware practices

Of course, there are further risk-aware practices to consider:

• Choose reputable platforms — always trade through established platforms like us that enforce strict security standards and comply with regulatory guidelines. Check for licensing, customer reviews and independent audits
• Use multi-signature wallets — these wallets require multiple approvals for a transaction to go through. They are especially useful for organisations or shared investments and reduce the risk of a single point of failure
• Avoid public Wi-Fi — never access crypto accounts using unsecured public networks. If necessary, use a virtual private network to encrypt your connection
• Bookmark trusted sites — phishing attacks often exploit fake domains. Use bookmarks for your wallet and exchange URLs, and avoid clicking on links sent via emails or messages
• Update and audit regularly — review your security settings, change passwords periodically and revoke access from any apps or platforms you no longer use

Crypto security summed up

• Crypto security involves strategies designed to address risks such as fraud, theft, and loss of assets, credentials, and accounts, which is especially important given the irreversible nature of crypto transactions 
• Our partner Uphold employs a Security-First Architecture with layered encryption, 24/7 monitoring and third-party penetration testing. It ensures full asset backing and transparency via Reserveledger and complies with top-tier regulatory and certification standards 
• All crypto investors face risks including phishing, malware, SIM swapping, exchange hacks and scams. It’s important to protect private keys, back up seed phrases and use 2FA  
• Use compliance focused platforms like us, avoid using public Wi-Fi and consider bookmarking verified URLs to login to your account