Cryptocurrency is a digital currency secured by cryptography and recorded on a decentralised ledger, usually a blockchain, rather than issued and controlled by a central bank.
How cryptocurrency works
Bitcoin, launched in 2009 by the pseudonymous Satoshi Nakamoto, was the first widely used cryptocurrency. Ownership is controlled by private keys: whoever holds the key for an address can sign transactions and move the funds. Transactions are broadcast to a peer-to-peer network and recorded on a public blockchain, which is updated through consensus mechanisms such as proof of work (Bitcoin) or proof of stake (Ethereum). Users store keys in a crypto wallet or leave funds with an exchange that holds keys on their behalf. Transactions are pseudonymous rather than anonymous and, once confirmed, practically irreversible.
Why cryptocurrency matters for security
Irreversible, borderless payments make cryptocurrency both a target and a tool of cybercrime:
- Ransom payments – ransomware gangs demand payment in Bitcoin or privacy-focused coins such as Monero.
- Exchange and bridge hacks – Mt. Gox lost around 850,000 bitcoins in 2014; North Korean hackers were blamed for the 2022 Ronin bridge theft (about $620 million) and the 2025 Bybit theft (about $1.5 billion).
- Fraud – fake investment platforms, pig butchering scams, phishing for seed phrases and wallet drainers.
- Abuse of resources – cryptojacking malware mines coins on victims’ computers and cloud servers.
Criminals launder proceeds through mixers and cross-chain swaps; the US sanctioned the Tornado Cash mixer in 2022. At the same time, public ledgers let investigators and blockchain analytics firms trace and sometimes seize stolen funds.
How to protect cryptocurrency
- Keep significant amounts in a hardware wallet and never share your seed phrase.
- Enable strong two-factor authentication on exchange accounts, avoiding SMS where possible.
- Treat guaranteed-profit offers and unsolicited “investment advisers” as scams.
- Verify recipient addresses before every transfer.
