Web3 is a further development of the World Wide Web that emphasizes decentralized control of data and online transactions. It is built using decentralized blockchains. It replaces the centralized server-client infrastructure of Web 2.0, where centralized private companies control and own the data.
However, organizations using blockchain and Web3 technology face a variety of security threats. According to the Global Web3 Security Report 2022, there were more than 167 major attacks in the Web3 space in 2022, causing a total loss of approximately $3.6 billion, an increase of 47.4% compared to 2021. Also relevant is the information from the Federal Office for Security and Information about the situation of IT security in Germany.
The 4 most common Web3 security risks
Cryptojacking: This occurs when a cybercriminal secretly uses the computing power of a company or individual to generate cryptocurrency.
Blockchain vulnerabilities: Cryptocurrency security issues include a so-called 51% attack, where one person or group of people controls more than 50% of a network’s blockchain. Although rare, a successful 51% attack allows an attacker to gain complete control of the network, allowing them to do things like block other transactions and double-spend coins.
Phishing attacks: Hackers use these social engineering attacks to steal user data such as B. Credit/debit card numbers and login information. In a phishing attack, a cybercriminal impersonates a trusted person or company to trick the target into opening an instant message, email, or text message. The attacker then tricks the victim into clicking on a malicious link. This way, the person can accidentally reveal sensitive information and get malware, such as. Install ransomware, for example.
Zero-day attacks: A zero-day attack exploits a software vulnerability that the manufacturer or developer is likely unaware of. In such an attack, a hacker releases malware to exploit the vulnerability before the developer has fixed the problem.
Some practices can mitigate these and other Web3 security risks.
7 Best Practices to Effectively Manage and Reduce Web3 Security Risks
1. Only download and install apps from known sources
One way for organizations to minimize Web3 security risks is to avoid downloading and installing applications from unknown sources, including websites that may not be reputable. Companies should only download and install applications from known sources.
2. Adopt the security by design approach
Traditional security by design principles are just as important for Web3 systems as for other systems. Therefore, developers must build security principles into their infrastructures, designs, and products.
For example, developers should aim to reduce attack surfaces, secure zero-trust frameworks, and ensure the principle of least privilege (POLP) and separation of privileges.
3. Apply security strategically
To ensure Web3 security, companies must use security strategically. This is just as important as applying security by design principles. Development teams need to proactively consider what types of blockchain technology they will use for their projects.
For example, they have to decide whether they want to use public blockchains like Ethereum or private blockchains.
This is crucial because private blockchains require users to confirm their identity, access rights, and other similar details. Public blockchains, on the other hand, allow anyone to join with varying levels of anonymity,
Companies should also consider these factors:
- Whether public, private, or hybrid, each blockchain has its challenges that impact the security of an organization’s decentralized applications. Therefore, a special approach to security is required.
- Development teams should take all necessary measures to mitigate threats such as phishing and consider the threats’ impact on workflows. Additionally, developers should address the impact of these threats on the overall architectures of their projects throughout the application development cycle.
- Developers should also consider data quality and the various risks of data manipulation, such as B. Unauthorized access to data, which exists with each iteration of the software.
4. Prioritize security throughout the development process
Developers should analyze and mitigate risks before and throughout the development process by, among other things, thoroughly evaluating the entire system architecture. Otherwise, cybercriminals may find it easier to break into a company’s network.
Therefore, security specialists and blockchain developers need to consider several things, such as: B. which areas of the code are affected, what vulnerabilities they need to report, and how they manage user permissions.
5. A definitive method for reporting vulnerabilities
Organizations should also develop a definitive method for reporting potential vulnerabilities. Companies should ensure that they do not publish the details of these vulnerabilities, especially critical vulnerabilities. This will help ensure hackers have less time to exploit vulnerabilities once they learn about them.
Companies should also consider implementing bug bounty programs to encourage users to report bugs responsibly.
6. Perform safety checks
Developers should evaluate and test their projects both before and after releasing new code. Companies should also consider hiring third-party security auditors who can uncover potential errors that internal security teams may have missed. Because neglecting security audits can lead to cybersecurity problems and massive losses, organizations must ensure they adequately secure known vulnerabilities before cybercriminals exploit them.
Additionally, conducting regular smart contract security audits increases the likelihood that companies will catch any potential flaws early in the process, allowing them to maintain the pace of development and build secure applications.
7. Two-factor authentication
Cybercriminals use social hacking to trick users into revealing their personal or confidential information. In the Web3 space, hackers do this by cloning popular applications to look exactly like authenticated applications. The cybercriminals then use the duplicate applications to collect users’ data and access their accounts in the genuine applications.
Companies should use two-factor authentication in this case as it limits hackers’ access in such situations as the process involves authentication and not just strong passwords to validate devices.