Technological advancements play a crucial role in shaping the daily lives of people worldwide, alongside redefining their digital experiences. Web3 is one of the most prominent highlights among technological advancements noted in recent times. Web3 uses the power of blockchain technology to provide the benefits of decentralization and enables opportunities for user-centric, open, and secure Internet. However, the emerging concerns regarding security in web3 have also created another problem for web3 experts. Protection of digital assets alongside safeguarding data privacy is essential for supporting the development and growth of web3 ecosystem. Decentralization in web3 and the complex cryptographic processes could provide the foundations for web3 security. Let us learn more about web3 security and how you can achieve security for web3 solutions with strategic approaches.
Foundations of Web3 Security
The best way to learn about the foundations of web3 security is at the basic concepts of web3. You can find answers to “What is web3 security?” by understanding the fundamental concepts of web3. Web 3.0 is a paradigm shift in the design of the Internet aimed at shifting the value of Internet experiences towards users. The first version of the Internet, also known as Web 1.0, restricted users from reading static information from websites.
The introduction of Web 2.0 helped in unlocking the potential of user-generated content. At the same time, web 2.0 also pointed to the problems with centralization that created a power imbalance between users and platform owners. Furthermore, web 2.0 also created the ideal grounds for the proliferation of a broad range of data privacy risks, cybersecurity concerns, and fraud.
The problems with Web 2.0 served as the reasons for creating the foundations of Web 3.0. If you want to learn web3 security, then you must know about the roots of web3. Most of the definitions of web3 paint it as the next version of the iteration. On the contrary, you must note that web3 marks a major milestone in terms of technological advancement as well as change in philosophical perception of the Internet. Decentralized ledgers and databases with distributed nodes in a transparent network help reduce the risk of monopolization of the Internet. In addition, cryptographic security with blockchain also provides better assurance of security in web3.
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Why Should You Worry about Web3 Security?
Web3 is undoubtedly the best tool for spelling the future of digital transformation. It offers better control to users over their data, virtual assets, and online experiences. You might wonder about the reasons for which you need a web3 security tutorial in the first place. It is important to note that the advantage of democracy on the Internet comes at a price.
With users in control of their data, assets, and online experiences, they have to take responsibility for security. At the same time, you could also bring the new concepts in web3 to the argument. For example, distributed networks, digital wallets, and decentralized applications provide adequate security measures that ensure that no one can gain unauthorized access to a user’s assets and data.
The foundations of web3 security risks can be traced to the unprecedented control of users over their data. Users could assume control over data without the involvement of big tech companies. In addition, users could also take control over their personal information and digital identity. Web3 allows users to determine the ways for utilization, monetization, and sharing of their data. However, the security features in web3 lead to security risks.
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How Could Web3 Security Features Lead to Risks?
The value advantages of web3 provide a clear impression of how it could change the perception of online experiences. At the same time, it is important to identify how the features of web3 can lead to security risks. Any web3 security course would emphasize the faults in design of web3, which lead to security issues.
First of all, you can notice a limitation in the use of blockchain technology or distributed ledger technology for facilitating decentralization in web3. Decentralization offers the benefit of transparency, which also leads to increased chances of fraud and tampering.
Another prominent feature of web3 points to facility of identity and tokenization. The unique hashes with blockchain technology enable authentication alongside facilitating control over assets. In addition, you can also rely on the advantages of smart contracts for ensuring authentication. However, the risks of smart contract vulnerabilities could affect the security infrastructure in web3.
The importance of web3 security tools also focuses on the element of zero trust. Web3 envisions the flow of data in a peer-to-peer model in decentralized applications without involving intermediaries. The lack of trust leads to concerns regarding accountability in event of security breaches or malicious attacks.
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What are the Prominent Web3 Security Risks?
The vulnerabilities in web3 security can be classified into two different categories: systematic risks and addressable risks. Systematic risks are the common web3 security risks beyond the control of users. Examples of systematic risks include technical failures of blockchain networks, crypto market volatility, unfavorable legislations, or takedowns.
On the other hand, users have to worry about addressable security risks such as phishing, theft of private keys, and smart contract exploits. The good news is that web3 is still in the early stages, and proactive measures for strengthening web3 security could deliver promising improvements. Let us take a look at some of the prominent groups of security risks that can be addressed with web3 security best practices.
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Social Engineering Attacks
The most prominent types of security attacks in web3 are social engineering attacks, which capitalize on the vulnerability of users. Some of the notable examples in answers to “What is web3 security?” include smart contract vulnerabilities, rug pulls, and phishing scams. These are the examples of social engineering attacks in web3. Smart contract logic hacks involve the exploitation of smart contract code to affect different functions and services such as crypto wallets, interoperability, and project governance.
Similarly, rug pulls involve creating hype around a project and playing with the trust of users in web3 to garner more investments. Once the scammers have what they need, they shut down shop and disappear without a trace. The collection of new web3 security tools also focuses on detecting issues like phishing. Scammers can deploy phishing attacks through emails or messages, impersonating a popular individual or a trusted organization. As a matter of fact, most of the recent attacks in web3 have focused more on human vulnerabilities.
The advancements in web3 rely on a broader network infrastructure with multiple actors, interfaces, and data storage apparatus. Blockchain transactions have the advantage of encryption. Decentralization reduces the risks of censorship alongside reducing the single points of attack. However, security in web3 remains elusive as blockchain transactions could expose data to many other risks.
Some of the notable risks for data in web3 include data availability, data manipulation, and data authenticity. In addition, the concerns of security risks for data also include limited centralized oversight. Who would take the responsibility of policing malicious and anonymous actors in distributed systems or the metaverse? The lack of centralized oversight also creates doubts regarding the safety of the broader web3 ecosystem.
Economic and Social Risks
The next highlight in a web3 security tutorial would point at the economic incentives alongside social risks. Most of the web3 applications have new types of financial assets and independent currencies, which create a small independent economy of web3. The embedded economic systems in web3 solutions create incentives for hackers.
On the other hand, it is also important to evaluate the risks of web3 security for consumers, the environment, and society. Businesses should seek answers to questions regarding support for accessibility and societal improvement while fostering the trust of users and businesses in web3.
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The most noticeable advantage of web3 use cases is the resolution of risks with data confidentiality and privacy. However, anonymity and self-sovereign identity (SSI) mechanisms create challenges for security. At the same time, transparency in public blockchains leads to resolution of anonymity, albeit with privacy tradeoffs. You can find a detailed review of identity risks in web3 security course topics with examples of risks to compliance and user experience. For example, SSI and crypto wallets feature a complicated onboarding process alongside limited interoperability.
Web3 anonymity also creates concerns for regulators as they cannot access identity data of users. As a result, it could open the avenues to risks of terrorist financing and money laundering. On top of it, decentralized IDs could also lead to complications in the existing regulations. Most important of all, secrecy through anonymity also raises questions about liability, consumer protections, and safeguards for social norms.
What are the Common Safeguards against Security Risks in Web3?
Users have to understand that web3 presents a broad range of opportunities for technological innovation. As a matter of fact, it has the potential to change the complete technological landscape with user-centric value advantages. At the same time, it is also important to learn web3 security principles and best practices for avoiding unwanted losses. Here is an outline of the important pointers you should keep in mind for ensuring safety against web3 risks.
Safeguarding Private Keys
Users storing their assets in self-custody wallets rather than centralized exchanges would have complete control over their private keys. In most cases, private keys can be backed up with a recovery phrase featuring a unique combination of 12 or 24 words in a specific order for accessing a crypto wallet address. The recovery phrase is an important addition among web3 security tools that serve as the password to your assets. Therefore, users should always pay attention to safeguarding their private keys in the best ways possible.
Protection against Phishing Attacks
Digital theft is a major addition among social engineering attacks, which can have a formidable influence on users. Most of the web3 scams, hacks, and phishing attacks would target your recovery phrase or private keys. Social engineering attacks are the most common web3 security risks that focus on earning the trust of victims. Users could receive emails or messages that impersonate the identity of a trusted firm or a popular web3 thought leader.
For example, you can receive an email with a link that states that you have won 10 ETH in a giveaway contest. Once you click on the link and enter the required details for obtaining the 10 ETH, you can say goodbye to your assets. Therefore, it is important to avoid sharing information about your private keys with anyone. Some due diligence on your behalf could go a long way in protecting you from phishing attacks.
Smart contracts are a vital component of the web3 ecosystem. However, smart contract vulnerabilities present a formidable security risk with the potential for higher losses than other types of risks. You would need web3 security tools for smart contract audits to ensure safety from risks due to smart contract vulnerabilities. In addition, users should also note that smart contract code is available in the public domain.
Therefore, it is easier to identify vulnerabilities in the smart contract code of a web3 solution. On the other hand, developers should follow a rigorous plan for security audits alongside implementing formal verification prior to launch of open-source web3 projects. Users can also find safeguards against smart contract vulnerabilities by choosing dApps with a proven record of safety.
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The impact of security in the domain of web3 can have broader implications for its adoption at a large scale. How would users trust applications that have security risks? Is it possible to distinguish web3 security risks in a myriad of dApps and innovative web3 solutions? The answers to these questions would decide the future of web3.
Therefore, it is important to resolve the issues in the initial stages of the development of web3. Users should take the initiative to resolve most of the addressable security risks in web3. On the other hand, web3 security professionals would also play a crucial role in strengthening the web3 ecosystem. If you want to become an expert in web3 security, you should start seeking resources to learn the fundamentals of web3 security.
*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!