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    The Risks of Web3: Is it Really Secure?

    In theory, the shift to a new generation of the internet is supposed to be more “decentralized and secure”. However, every major technological shift exposes users to a range of new security risks. Just like it did when the internet moved from Web 1.0 to Web 2.0. Users had the ability to post content on the internet, which meant exposure to malicious hacks that can jeopardize their data and infect whole databases. Although Web3 is the next big decentralized technological advancement, making intermediaries obsolete, it brings with it a host of security implications. So, is Web3 really secure as it claims to be?

    Web3 Recap 

    First, let’s have a quick recap of what Web3 is at its core. Web3 is the third generation of the internet that operates through decentralized databases. Historically, web applications have been under the control of central entities that take full control over users’ data. 

    Instead of depending on centralized authorities, Web3 applications are distributed across a peer-to-peer network of connected nodes. Web3 requires the network’s general consensus before adding a new transaction or update. What makes Web3 appealing is that it relies on cryptography. Data recorded on the blockchain are encrypted in a way to ensure that they can never be altered or removed without the network’s consensus. 

    Here lies Web3’s security strength, its decentralized characteristic leaves no one point of failure, as opposed to a centralized server. In addition, Web3 has shifted how we deal with ownership since users can tokenize and trace digital assets, credentials, physical items, and possibly everything on an immutable ledger. 

    Web3 Point of Failure

    Web3 Security Features 

    So what really makes Web3 so secure? Here are some of the factors that add an extra layer of security to the new chapter of the internet. 

    • Decentralization: The decentralized aspect of the network makes it hard for attackers to target a specific point of vulnerability. 
    • Trustless: Users don’t have to trust central authorities with their data. Instead, data flows from peer to peer in decentral applications. 
    • Tokenization: The blockchain is an immutable ledger, and thus, all assets tokenized will be secure from any change or alteration. 

    However, Is Web3 Really Secure? 

    All this talk about Web3’s security might make people believe that it is the promised land of the internet. As if nothing can stand in the way of Web3 and the decentralized network. However, this is far from the truth. Although Web3 has created a radical shift in technology and data storage advancements, it has brought a new set of security risks that all of us should keep an eye out for. Some have questioned if even Web3 is that decentralized

    Let’s have a look at Web3’s security implications.  

    Social Engineering Attacks

    We’ve all witnessed what the introduction of the internet brought with it, cyber threats. However, the new iteration of the internet ushers new types of cyber threats that we didn’t see in the former generations of the internet. Some of these social engineering attacks come from the way Web2 and Web3 architecture interact. Others come from blockchain protocols, flaws in code, and basic human vulnerabilities. 

    • Smart Contract Breaching: Smart contracts are a self-executing mechanism that operates once a certain agreement is reached. They act as the basis of blockchain technology as they negate the need for any intermediaries between parties. However, smart contracts are pieces of code that could be prone to flaws. Hackers can find vulnerabilities in code that can jeopardize the funds of users.
    • Cryptojacking: A new type of attack introduced by Web3 is cryptojacking, which is the act of hijacking a computer and using its resources to mine cryptocurrencies against the users’ will. 
    • Rug Pulls: This type of attack happens when a crypto or NFT project pulls the plug on the project and retracts with all community funds without providing what was promised.
    • Phishing Attack: Although phishing attacks are not new,  they are facilitated in Web3 by the fact that users must take responsibility for the security of their data, instead of entrusting a central authority.

    Data Security and Reliability 

    Although data managed by distributed networks is encrypted with cryptographic hashing, it doesn’t take away the fact that data can be subjected to other security risks such as:

    • Data Authenticity: The data managed by blockchains is shared with thousands of nodes operating a distributed network. So, how would anyone ensure that the data is authentic or valid? Web3 argues that consensus and network monitoring over shared data makes sure that the flowing data is not tampered with. 
    • Data Availability: Since nodes operate the network, a question arises about data availability. How depending on nodes for data availability will affect the whole system? If more data were to traffic the system, will it be able to scale? When and how does the data become unavailable? 
    • No Legal Monitoring: The distribution of the system makes it harder to track cybercriminals and illicit activities. Moreover, Web3 is yet to be regulated, and any data breach could go unnoticed by legal systems.  

    Identity and Anonymity 

    Web3 has taken the power that resides in centralized Web2 servers and placed them in users’ hands. However, self-sovereign identity and anonymity have downsides. For instance, crypto wallets require a complex setup process that the average user might find hard and challenging. Users have to maintain their private keys all the time, and if the private keys were jeopardized, users will have no way to access their funds. 

    Moreover, Web3 is still dancing around the issue of privacy. Having a fully transparent blockchain leaves questions like what data is on-chain? Who has access to the data and who can view them? Who decides what to authenticate? 

    In addition, anonymity in Web3 opens the door to illicit activities such as money laundering and terrorist financing. However, it’s important to note that Web3 itself is not illegal or a platform for criminal activities. 

    Economic Incentives

    Web3 at its core is embedded with financial assets and currencies. Therefore, unlike Web2 cloud systems where hackers only get a hold of personal data, Web3 provides hackers with financial incentives. In traditional servers, databases are hacked with no clear incentive. The blockchain, however, there are clear and significant financial gains encoded directly onto the ledger. 

    In traditional cloud servers, a hacker can get access to users’ personal information such as credit card credentials and social security numbers. However, credit card companies can freeze the account upon request. On the other hand, users that get their crypto wallet hacked have no other way of returning their stolen funds. 

    Should We Give Up on Web3? 

    No. At least not yet. Every technological advancement has its ups and downs. Although Web3 has its fair share of security problems, it does answer other security-based issues that we are dealing with in the current version of the internet. Web3 breaks this pattern of central authorities gaining all the power and distribute the power onto a decentralized network. 

    Web3 is empowering people through distributed governance, addressing major issues of former iterations like control, censorship, ownership, fraud, and privacy. Whatever new security implications the Web3 brings with it, it is still in its infancy. We just have to wait and see where this technology might lead us in the future

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