How to protect your digital wallet from cyber attackers

If you want to invest seriously in digital currencies then you will need a digital wallet to store your assets in. Here’s how to protect it from cyber attackers.

Since the start of the pandemic, digital wallets have grown considerably in popularity. Before Covid 38% of surveyed consumers used digital wallets. Today that figure has risen to 55%.

A digital wallet is a place to save your credit card and other payment information using a service like Google Pay, PayPal or Wallet by Apple. Then, when you order online from a restaurant, supermarket, department store, or other retailer, you pay using your digital wallet, choosing the payment method you prefer. . 

But while you may be familiar with this type of digital wallet (even if you didn’t know what it was called), you may be less aware of a cryptocurrency digital wallet if you haven’t started investing in digital coins using apps like

A cryptocurrency digital wallet (also known as a cryptocurrency wallet) is a device, software or service that stores the public or private keys for cryptocurrency transactions. As well as storing keys. it also encrypts and signs information for transactions.

And unfortunately, though perhaps not surprisingly, as we all get more used to using digital wallets, so cyber crime has increased.

There are two ways that crypto criminals are able to steal cryptocurrency. They can steal it directly, or use a scheme to trick you into giving it to them. In 2021, they directly stole an eye-watering US$3.2 billion worth of cryptocurrency – five times more than was stolen in 2020.

How does cryptocurrency security work?

Most people buy cryptocurrency from an exchange. To do this they need to open an account and deposit fiat currency, then convert it to a cryptocurrency. The cryptocurrency is usually held in what is known as a ‘custodial wallet’.

This means that is it assigned to your account, but the private keys that control the cryptocurrency are held by the exchange. This means that the exchange stores the cryptocurrency on your behalf.

And just like a bank doesn’t physically keep all of its deposits in cash, an exchange will hold just enough cryptocurrency in hot wallets (these are connected to the internet) to be able to complete transactions. The rest of helps in cold wallets (these are now connected to the internet) for security.

However, unlike a bank, there are no government financial claims schemes to guarantee cryptocurrency deposits if the exchange that holds your cryptocurrency goes bust. So it is not as secure as keeping money in a bank. And cryptocurrency exchanges do get hacked – as we have already seen with the figures above.

So how can you protect your cryptocurrency investments? Here are some security steps to follow.

Security step 1

The first step that you need to take when you are buying a digital wallet it so choose a cold wallet. This will give you greater security when you use it to make transactions. You won’t get the same level of security with a hot digital wallet because it stores private keys online, which is risky. 

A cold wallet is an offline wallet, which means that it stores all private keys in the offline device. When you want to make a payment, you have to turn on the data and make the payment.

Security step 2

Another security step is never to use a public network because it can harm your asset, and anyone can attack your digital wallet. Not many people are aware of this security risk, and lose their investment as a result.

Instead you should always use a secure and private network while making your transactions. You can also use the PN security for your digital wallet to help secure your asset from being hacked by cyber criminals.

Security step 3

And finally if you want to secure your digital wallet, it is important to use antivirus software to secure your device and ensure your security is up to date.