Digital Security in the Age of Web3, dApps, and Digital Assets.
The Web has seen massive iterations and paradigm changes over the past two decades, and one of these novel advancements is the so-called Web 3.0 (a.k.a. Web3) era. The rise and innovation of Cryptocurrencies and digital assets have catalyzed the growth of this new paradigm with over 400 million users globally and yielding a trillion-dollar industry.
As with any technology, Web3 and the growing digital asset space are not without risks and complications, which have resulted in losses of nearly $4 billion each year.
Unlike traditional web technologies that boast of mature security frameworks and practices(as seen in the InfoSec field), security in the Web3 paradigm is still in its nascency.
In this article, we dive into the basic concepts of Web3, some known security risks involved, and a resolution path with Digital Security.
What is this “Web3"?
The Web3 paradigm encompasses several domains, including Artificial Intelligence (AI), Internet of Things (IoT), Extended Reality (XR), Cryptocurrency, and Blockchain solutions, among others. However, for the purposes of this article, we will concentrate on Cryptocurrency and Blockchain solutions.
The fundamental goal of Web3 is to power new economies via Decentralized Applications(dApps) and Digital Assets.
dApps are a distinct class of software applications that leverage blockchain systems (such as Smart Contracts) and applied cryptography (such as Public-Key Infrastructure) to function. What sets dApps apart is their unique core properties, which include, but are not limited to, decentralized control, censorship resistance, user ownership, privacy, and more. Notable examples of dApps include Muesliswap, Rarible, and PoolTogether.
In the context of Web3, Digital Assets are virtual tokens or artefacts generated through specialized transactions on blockchains. These assets serve as either units of value or representations of resources(physical/virtual), depending on their scope of use. Some examples include voting tokens, digital art/collectibles, and identity certificates.
Together, dApps and Digital Assets form the Web3 experience that enables users to make transactions and perform tasks online in ways that prove better efficiency, more freedom, and improved flexibility than traditional applications and services offer.
What are the Security Risks in Web3?
The ability for Web3 solutions to incorporate real-world economic factors into the virtual realm is a double-edged sword. While this feature is a significant advantage, it also comes with a downside: the outcomes and consequences of these economic factors online have real-world implications.
For instance, when Alice transfers digital money (like Bitcoin) to Bob, Bob receives this digital money that they can later convert into real-world value and use. This fundamental difference sets Web3 apart from the traditional web space, where information and data may or may not have indirect real-world economic effects on the parties involved. In contrast, Web3 has direct (financial) implications for the parties involved.
In the traditional web space, breaches lead to the loss of sensitive user information(such as credit card details) that may later result in illegal uses. In Web3, a breach leads to the direct loss of user funds and financial assets.
Users and businesses face similar risks with dApps and Digital Assets online. Some of these risks include(but are not limited to):
Wallet Risk: A crypto wallet is software/hardware that serves as a Key Management Tool for accessing the special keys used to control the accounts holding your digital assets.
Think 1Password(or a Yubikey) but for Web3. A wallet with a buggy design or unsecured (recovery) keys is at risk of being compromised by bad actors.Smart Contract Risk: A Smart Contract(a misnomer) refers to the programs or scripts that operate on the blockchain to power up the dApps that users interact with to do work.
Poorly written scripts or scripts containing malicious code run the risk of being exploited by bad actors.Phishing Risk: Web3 users may encounter and interact with seemingly legitimate hyperlinks or websites that promise a particular outcome upon interaction. However, these links may, in fact, be malicious and grant an attacker unauthorized access to the funds and financial assets of the user.
Failing to evaluate these links properly puts Web3 users at risk of being phished and losing their Digital Assets.
The lack of proper tools and procedures in the Web3 space to eliminate(or at least mitigate) these risks has led to catastrophic losses in history. Examples of such unfortunate events include the $600M Poly Network hack, the $500M Ronin Network hack, and the $1.14M hack of Kevin Rose’s account.
Digital Security: The Path To A Safer Web3
Digital Security involves implementing robust controls, protocols, and processes into Web3 applications and solutions. Doing so enables us to successfully reduce(and maybe even eliminate) the rate of cyber-attacks that cause direct real-world damage to the livelihood of people.
You, as a reader, can start practising good security habits in Web3 by doing some of the following:
Only interacting with hyperlinks and dApps that you know, trust, and can verify.
Using Two(or Multi) Factor Authentication for all your accounts and devices.
Managing the majority of your digital assets with a reputable hardware-based wallet.
Creating backups of your recovery keys and storing them in unrelated and distributed locations.
Frequently replacing your existing keys and passwords with new ones, periodically.
In Conclusion…
Digital Security offers a path to ensuring that users(and enterprises), have a safe and secure Web3 experience. The need for improved security standards in Web3 is real and requires the collective efforts of all users, businesses, security experts, researchers, and hackers alike.
Addendum
Join G360DAO: The Next Wave of Digital Security
Do you believe in the power of collective efforts to raise the bar for Digital Security by implementing real-world and practical solutions?
Would you like to be part of a community of individuals who share your passion for Digital Security and firmly believe in rewarding and incentivizing the valuable contributions made in this field?
If you are a hacker, security engineer, developer, enthusiast or a casual user looking to contribute in any way, shape or form(and find yourself screaming “Yes!” to the above questions), then we welcome you to be a part of the G360DAO Community.
Join our Discord server today and be a part of the discussion.
Official G360 websites, news outlets and collaboration environments:
Twitter: https://twitter.com/G360DAO
Discord (https://discord.g360dao.io)
GitHub: https://github.com/g360dao
G360DAO Website: www.g360dao.io
Mirror Blog: https://mirror.xyz/g360dao.eth