Web3 is an iteration of the World Wide Web that values decentralized control over data and online transactions. It is built using decentralized blockchains. It replaces the centralized server-client infrastructure of Web 2.0, where centralized private enterprises control and own the data.
However, organizations using blockchain and Web3 technology are subject to a variety of security threats. In fact, in 2022, there were more than 167 major attacks in the Web3 space, for a total loss of about $3.6 billion, up 47.4% from 2021, according to the Global Web3 Security Report 2022.
4 Most Common Web3 Security Risks
Blockchain vulnerabilities: Security issues associated with cryptocurrency include what’s known as a 51% attack when 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 have complete control of the network, enabling them to block other transactions from confirming and double-spend coins, for example.
Phishing attacks: Hackers use these social engineering attacks to steal user data, such as credit/debit card numbers and login information. In a phishing attack, a cybercriminal takes on the identity of a trusted individual 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. In this way, the individual can inadvertently reveal sensitive information as well as install malware, such as ransomware.
Zero-day attacks: A zero-day attack exploits a software security vulnerability that the vendor or developer likely doesn’t know about. During such an attack, a hacker releases malware to exploit the vulnerability before the developer has patched the flaw.
There are a few practices that can be used to 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 businesses to mitigate Web3 security risks is by not downloading and installing apps from unknown sources, including websites that may not be reputable. Companies should only download and install apps from known sources.
2. Adopt the Security-by-Design Approach
Traditional security-by-design principles are as critical for Web3 systems as they are for other systems. Therefore, developers must incorporate security principles into their infrastructures, designs, and products.
3. Apply Security Strategically
To ensure the security of Web3, organizations must apply security strategically. Doing so is as important as embracing security-by-design principles. Developer teams must proactively consider the types of blockchain technology they will be using for their projects.
For example, they must decide whether to use public blockchains, such as Ethereum, or private blockchains.
This is critical because private blockchains require that users confirm their identities, access privileges, and other similar details. Public blockchains, on the other hand, allow anyone to join with various levels of anonymity,
Companies should consider these factors as well:
- Whether public, private, or hybrid, every blockchain has its own unique challenges, which will impact the security of an organization’s decentralized applications. As such, a unique approach to security is required.
- Developer teams should take whatever steps are necessary to mitigate threats, such as phishing, and address the effect the threats will likely have on workflows. In addition, during the application development cycle, developers should address the impact of these threats on the overall architectures of their projects.
- Developers should also consider the data quality and various data manipulation risks, such as unauthorized access to data, that exist in every iteration of the software.
4. Prioritize Security Throughout the Development Process
Developers should analyze and mitigate risks before and throughout the development process, including by thoroughly assessing the overall system architecture. Not doing so can make it easier for cybercriminals to breach a company’s network.
Consequently, security specialists and blockchain developers must take into account a number of things, including the areas of the code that are affected, the flaws they need to report, and how they manage user permissions.
5. Have a Definitive Method To Report Vulnerabilities
Organizations should also develop a definitive method to report potential vulnerabilities. While doing this, companies should ensure that they don’t publicize the details of these vulnerabilities, particularly for critical flaws. This will help reduce the time hackers have to exploit any vulnerabilities once they find out about them.
Companies should also consider implementing bug bounty programs to encourage users to responsibly reveal any bugs.
6. Implement Security Audits
Developers should evaluate and test their projects before as well as after releasing new code. Companies should also consider hiring external security auditors who can uncover the potential bugs that internal security teams may have missed. Since not prioritizing security audits can result in cybersecurity concerns and massive losses, it’s critical for organizations to make certain that they adequately secure known vulnerabilities before cybercriminals exploit them.
Additionally, conducting smart contract security audits regularly increases the odds that companies will catch all potential bugs early in the process, enabling them to maintain the pace of development and create 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 apps so they look just like the authenticated ones. The cybercriminals then use the duplicate applications to collect users’ details to access their accounts on the real applications.
Organizations should use two-factor authentication to handle this as it reduces hackers’ access in such situations because the process involves using authentication, not just secure passwords, to validate devices.