As we all know Web 3.0" describes the next stage of Internet development, which will have decentralized networks, blockchain technology, and more extensive AI applications.
Every new advancement in technology comes with its own advantage and downside, which is more reason why individuals with organizations need to be aware of the risks involved in every new tech endeavor to understand how to navigate its use and stay safe.
As we notice the rise and hype in Web 3.0, organizations should not be carried away but understand the necessary safety requirements to protect their data and privacy from being exposed to sudden attacks.
Do you know that In the second quarter of 2022, 48 major attacks were monitored in the Web3 space, with total losses of approximately $718.34 million, down approximately 40 percent from $1.2 billion in the first quarter and approximately 2.42 times the losses in Q1 2021 ($296.56 million)?
From January to June 2022, assets lost in the Web3 space due to attacks totaled $1,912.87 million.
This statistic is not to scare individuals or organizations about the emergence of Web 3.0 but to bring to their notice that Web 3.0 also comes with new cybersecurity, financial, and privacy threats besides the familiar risks of Web 2.0.
While Web 3.0's early stages saw increased investment, advancement, and marketing, they also saw instances of fraud and criminality. As a result, while the wider market negotiates the opportunities and risks of a more decentralized Internet, developers and consumers of the Internet must assess Web 3.0 holistically, considering its security benefits and downsides.
Below, therefore, are the Web 3.0 security risks and threats you should know.
1. Blockchain-based identity theft and fraud
In the age of Web 3.0, fraud and identity theft based on blockchains are becoming serious dangers. Although the security features of blockchain technology are well-known, fraud is still a possibility. Blockchain technology has flaws that hackers and cybercriminals are using to obtain assets and private data.
Using phishing scams is one of the most popular ways to steal someone's identity using blockchain technology. Users are duped into disclosing their private keys or other sensitive information by cybercriminals, who can then use this information to get access to their blockchain accounts and take their assets.
Below are some examples of blockchain-based identity theft and fraud.
- Flash loan attacks
Cyberattacks of the sort known as "flash loan attacks" are becoming more frequent on platforms for decentralized finance (DeFi). Uncollateralized loans such as flash loans let borrowers borrow money without putting up any security. While flash loans are meant to be used for legal purposes like refinancing or arbitrage trading, they can also be used by attackers to attack DeFi smart contracts.
This is not a joking matter, in fact, just in 2023, reports show that a company lost a whopping amount of $197 million dollars and this has been recorded as the largest crypto hack of 2023 so far, and the eleventh largest of all time.
In a flash loan attack, an attacker borrows a sizable sum of cryptocurrencies using a flash loan and uses that money to influence the price of a particular asset. The attacker can make money by intentionally raising or lowering the asset's price.
DeFi platforms have a responsibility for the safety of their customers' cash and should take precautions like installing circuit breakers and conducting frequent audits very seriously. Despite the serious threat posed by flash loan attacks, the DeFi ecosystem can flourish and mature so long as appropriate measures are taken and best practices are followed.
- Cryptojacking
Cryptojacking is a sort of cyberattack in which a person gets illegal access to another person's computer, phone, tablet, or server in order to mine cryptocurrencies and make money off the tokens they have stolen.
Hackers frequently carry out this attack by duping the user into clicking on a dangerous email link, which downloads crypto-mining malware onto the victim's device. Alternatively, the attacker might insert harmful JavaScript code into a website or advertisement so that it launches when the user's browser loads it.
The user might not be aware that their asset is being taken because this malware operates in the background. The user's device may have been hacked if it performs slowly.
In fact, According to the 2023 SonicWall Cyber Threat Report, the number of attempted crypto jackings increased by 43% from 2022 to 2023. This increase caused the total number of attacks to surpass the 100 million mark for the first time and reach a new all-time high of 139.3 million by the end of the year.
With crypto jacking assaults on the rise and the cyber landscape constantly changing, it's more crucial than ever to keep up with the newest threat intelligence to stay safe.
-
Manipulated AIs
Although artificial intelligence (AI) is a remarkable technology, it is susceptible to being used maliciously. An AI can be readily tricked if it obtains its knowledge from unreliable online sources.
The extensive circulation of incorrect information might result from such manipulation.
An example is when a company, government, or group floods the internet with propaganda, which an AI unintentionally uses in its answers. In a similar vein, ransomware or malicious code may get into an AI and propagate unnoticed to other people or programs.
- Rug pulls
Rug pulls are one kind of fraud that has proliferated in the Crypto industry. A rug pull occurs when the developers of a cryptocurrency project or token abruptly drop the initiative and vanish with the money from investors, leaving the investors with worthless tokens.
Developers that construct a good cryptocurrency project or token, draw a sizable investor base, and then abruptly quit the project are the ones who often carry out rug pulls. This frequently happens after the creators have realized substantial gains, leaving the investors with tokens that are useless.
The absence of control and regulation in the digital currencies industry is one of the factors contributing to the prevalence of rug pulls. Before investing in any cryptocurrency project or token, investors must perform extensive research and due diligence in order to prevent being a victim of a scam. Additionally, investors should be wary of claims of high returns and refrain from making larger investments than they can afford to lose.
Regulators must develop precise rules and regulations for the Bitcoin market in order to reduce the possibility of rug pulls. Investors should also be cautious of initiatives that lack a defined plan, white paper, or team since these might be indicators of a possible rug pull.
2. Data security and reliability
A bigger network topology that takes into account actors, data storage, and interfaces inevitably raises the possibility of security threats. The encryption of blockchain transactions and the decentralization of data and services limit the possibility of a single point of attack and censorship, but they also have the ability to expose data to a wider range of threats.
Here are a few of these dangers:
- Data authenticity
The veracity of data stored on the blockchain network cannot be easily verified due to its decentralized structure. Despite the fact that blockchain transactions are encrypted and impervious to tampering, it is still possible for malicious parties to alter the data at the transaction's source or endpoint.
This danger is particularly important for sectors like healthcare, banking, and legal services that depend on the accuracy of their data. Severe repercussions, such as faulty medical diagnosis, financial fraud, and legal conflicts, can result from inaccurate or altered data.
Blockchain developers must include strong security protocols that guarantee the integrity of the data stored on the network to reduce the danger of data authenticity.
-
Data manipulation
The blockchain's vulnerability to data tampering is a major concern. It is feasible for hackers to tamper with data at either the beginning or finish of a blockchain transaction, despite the fact that the transactions themselves are encrypted and unchangeable. This might be accomplished by faking a user's digital signature or tampering with the transaction data itself.
Particularly in fields where data integrity is paramount, such as healthcare, banking, and law, the repercussions of data tampering may be devastating. Falsified information can cause a variety of negative outcomes, including erroneous medical diagnosis, financial fraud, and legal conflicts.
Developers of blockchain systems should incorporate rigorous security mechanisms to protect the honesty of the information stored there. Multiple network nodes will need to verify the data, so we'll need to use identity verification, cryptographic hashing, and consensus algorithms.
Conclusion
The next generation of the web will focus on better safeguarding the ecosystem while also empowering users in technological, social, and economic ways through distributed governance. While distributed networks do have some advantages in terms of security, they are not completelIn the second quarter of 2022, 48 major attacks were monitored in the Web3 space, with total losses of approximately $718.34 milliony safe from software attacks, human error, and so on.
Issues of power imbalance, control, censorship, fraud, privacy, and data loss are all addressed in the vision of Web 3.0. It does not, however, rule out the possibility of a fresh wave of threats related to privacy, identification, financial incentives, and social engineering techniques.