The blockchain is a distributed ledger that records transactions in an immutable manner. This immutable and incorruptible digital record of all network transactions implies that descriptions cannot be changed or deleted.
The blockchain is one of the most secure technologies ever created, yet it was built for individuals without technical knowledge. This makes it ideal for use in any area that values security, such as banking, healthcare, and government.
However, this paves the way for many hidden cybersecurity threats in Web3. In this blog, we will talk about how you can protect your blockchain project from hacking.
Hackers can get into your work in different ways and steal data or money - they could hack through your website or your wallet address. This is due to the privacy-focused nature of Web3. What is relaxing is that you can do many things to protect yourself against these risks!
Let’s get started.
What is web3?
The web3 ideology revolves around the motive of bringing changes and resolving cybersecurity issues with the help of centralization. The primary aim of web3 is to make people powerful in controlling user data and integrity. However, before we proceed with it, we need to track the history of the internet.
Web 1.0
During the times when the internet revolution began with web 1.0, there were significantly fewer content creators. Also, users had a primitive experience. Naturally, a majority of the people were content consumers.
Personal static websites dominated the landscape during the 1990s and were housed on ISP-managed web servers and free web hosting services. These websites were frequently monetized by bombarding the viewers with banner and popup adverts.
Web 2.0
Next, web 2.0 emerged to enhance usability, interoperability, and user-generated content. This was also the beginning of the social web, wherein it was possible to build a virtual community by interacting and engaging with user-generated content of different users.
However, because web 2.0 is centralized, all data is controlled by businesses such as Google, Facebook, and others. There was also a dearth of true innovation, essentially an improved version of web 1.0.
Web 3.0
The next phase of the internet revolution is Web 3.0 which aims to make the internet a database. The primary goal is to eliminate the role of “middlemen” and decentralize the web.
This is exactly what cryptocurrencies attempt to do. The decentralized infrastructure of web 3 gives power to the crypto’s digital currency, and interestingly, with the help of this infrastructure, it is even possible to generate individual tokens.
The ultimate objective of blockchain and web3 is to provide a uniform, unified, platform-agnostic solution to data management across systems that do not rely on a centralized authority with its plan. All data will be shared, and linked services can offer diverse perspectives throughout the metaverse by exploiting the same data. As a result, this data multiverse promises to guide us across various universes. We will also govern the ecosystem through a decentralized autonomous organization (DAO).
However, security threats are crucial because the data lives outside a controlled and safe institution. There are also smart contract vulnerabilities and cross-chain bridge flaws to consider. Furthermore, policing cybercrime is also challenging.
The Web3 Working
Nowadays, there have been tremendous impacts of Decentralized applications or the “dApps.” In Web3, these apps will be on the blockchain with network nodes.
Users will own the internet, and nodes will operate like web3 providers, pulling data from the blockchain and running a copy of it. Smart contracts cannot interface with web3 libraries in the absence of nodes. In that sense, nodes serve as a portal to the blockchain.
All logic and state will be managed using smart contracts. Users will still utilize the front end to connect to the network node and interact with web3 in this case. This can include making purchases, creating content, and a variety of other activities.
Users will log in and authenticate transactions with the help of private keys stored in a wallet. This strategy gives the consumer more control and privacy. There are, nevertheless, certain security compromises to consider.
Web3 Security Risks That Businesses Should Consider
Everything is immutable, transparent, and publicly available when it comes to the transactions happening on the blockchain. This is because no centralized authority can look into the transactions. There are no “middlemen” in between, making it even tougher to address the security issues properly.
In this regard, these are some of the most common web3 security risks you need to look out for to protect your blockchain project from hacking.
Authentication and signing
Unlike the protocols in web2, most decentralized apps in web3 don't authenticate and sign API responses. This points towards the fact that the verification factor here is not the best. You won't know whether the replies came from the intended app, and you won't know if the data was tampered with.
In this case, web3 users would encounter apps that do not adhere to fundamental security best practices. As a result, users must tread cautiously and assess the platform's credibility and security posture before joining and utilizing their wallets.
Smart Contract Vulnerabilities
Web3 is based on the creation and execution of smart contracts. These smart contracts are software or scripts that run on the blockchain and enforce predetermined rules whenever certain criteria are met.
Because there is no legal precedent for protecting smart contracts, there can be substantial consequences anytime smart contract code is susceptible. As a result, possible losses (cryptocurrencies and NFTs) from a hack cannot be insured or recovered in many circumstances.
Insecure Digital Wallets
Even in the case of digital wallets, they are not completely secure and can leak sensitive data. After all, it's just software and can have its own flaws. Crypto wallets are software, and flaws in the codes may always be exploited by hackers.
No Central Authority Means No Recourse
The users within the Web3 space have all the control over their data. There are no intermediaries who can offer any recourse in case of a cyberattack. It is not possible to revert the digital assets that have been stolen, and also, you cannot reset the passwords.
Does not have a single source of Truth
For the known web3 vulnerabilities, there is no single source of truth at present. To offer essential data for vulnerability management programs in web3, we need a decentralized counterpart of the National Vulnerability Database. This would greatly simplify web3 developers' ability to keep track of known vulnerabilities and prevent bringing them into new projects.
Currently, there are multiple sources that we use. They have incomplete information and are spread across different platforms like:
- SWC Registry
- DeFi Threat Matrix
- Smart Contract Attack Vectors
- Rekt
How Do Businesses Secure Web3?
Web3 security has become paramount today. Whether you’re into startups or large companies, it is imperative to secure web3. To do this, you can take the following security considerations.
Be thorough with the web3 market.
There are numerous legal, economic, and cultural aspects of Web3 that you need to consider with the technological aspects. Some web3 setups or integrations, for example, have the potential to directly contradict existing regulatory compliance regulations such as Know Your Customer (KYC).
In addition, the rules and regulations governing the crypto space are not the same as others.
Because web3 technology is subject to social engineering attacks akin to web 2.0, you must evaluate how your web3 initiatives may attract and encourage hackers. DeFi hacks, for example, are frequent due to cross-chain flaws, flash loans, and code attacks. The crypto wealth they frequently get away with is likewise huge.
Let auditors perform Security Audits.
Although time is critical in the Web3 space, developers need to take some time to test and check the project's code. Here, a third-party security auditor plays an important role in searching for potential bugs that the in-house team of auditors might have missed.
Failure to carry out security audits will result in cybersecurity vulnerabilities- and rising losses. The attack may become more difficult to deal with if a hacker can exploit an existing vulnerability before someone does.
Even though web3 developers may not have security governance for smart contracts, it is still the organization's responsibility. It's important to perform regular smart contract audits to find any existing vulnerabilities and identify gaps in your security controls. You can sustain development speed and deploy a secure application by discovering defects early in the development process.
Web3 Is New, But Something Stays Constant
Blockchain technology is relatively new and it’s not without its pitfalls. Securing a project against being hacked can seem daunting. To protect your blockchain projects from getting hacked, first you should do your research on what kind of blockchain system you are protecting your company from before taking any action.
Know how hackers operate and how they plan to hack your system so it will help you foresee attacks ahead of time and work out how to stop them before they happen or mitigate the effects once they do start happening. Your research should involve what type of encryption protocol to be used for the server, which is much like installing firewalls in particular kinds of applications that protects files on computers or passwords in websites that secret usernames and passwords.
Web3 security will only improve as the technology advances. However, it is critical to constantly adopt a proactive approach to web3 and blockchain security. In reality, you should already be engaging on proactive cybersecurity in web2.
Although the future will offer a slew of new technology, conventional security best practices will remain in place. However, web3 dApps, distributed ledgers, and crypto assets present unique security problems that we cannot afford to ignore.
No comments yet