What is Web3 security? In moving beyond Web2, Web3 resolves many of the vulnerabilities inherent to Web2 technology. However, this process is not completely painless as Web3 brings its own set of vulnerabilities and inherits many Web2 problems.
Web3 security refers to multiple attack vectors that both projects and users are confronted with – and the various means by which they can defend themselves. It’s also about the pivotal goals for the Web3 ecosystem and all related projects, dependent on each other’s success and security.
Web3 relies on the decentralized storage of data, using cryptography to ensure that data cannot be altered or removed without agreement from the supporting network. For example, it’s difficult and expensive to change a given block in a blockchain. Changing a block automatically changes the value of the subsequent block. This would, in turn, invalidate the hash on the block following that, and so on. In other words, any change would require changing much of the rest of the blockchain. It’s not impossible for such changes to occur, but they involve broad consensus from the supporting network and are highly resource-intensive. Clients participating in Web3 do not have to trust a centralized provider as implicit trust is built into the blockchain.
Security challenges in Web3 Anonymity Web3 proponents claim that anonymity is one of its key parts. For example, in cryptocurrencies, user wallets and transactions are visible on the blockchain but not connected to their owner’s identity. This gives some privacy, ut it also poses challenges to security with uncertain KYC/AML or nodes tracking IP address transactions. For example, if a hacker steals funds from a cryptocurrency wallet, it would be difficult to track down the person responsible. The challenge of connecting a wallet with an identity allows hackers to get away with stolen funds.
This, in turn, requires a complicated process of tracking money flow between wallets, typically through centralized exchanges. Privacy tools make it more difficult to track transactions, but blockchain analytics tools can anticipate, track and visualize attacks on the blockchain. That’s why blockchain analytics tools are becoming a vital part of any project’s security defenses as they address the pain points caused by anonymity.
In the future, regulatory frameworks will likely include Know Your Customer (KYC), and Anti-Money Laundering (AML) checks for Web3 users. One clear benefit of this for Web3 security is that it would combat the widespread rug pull scams. Exit scams are the most popular attack vector in Web3, so increasing transparency around project teams and their accountability is a significant advantage. The tension between the benefits and risks involved with internet anonymity has yet to be resolved, but new technologies such as decentralized identity may help address some of the concerns.
Transparency Web3 projects typically foster transparency through transparent ledgers and open-source practices. Transparency creates a healthier environment for Web3 security, making it harder for projects and institutions to conduct irresponsible activity out of sight. Furthermore, with the underlying code and its ledger activity available for anyone to access, it’s very easy to check a project for issues, vulnerabilities, or malicious code at any time.
Still, this leaves projects open to new types of attacks. Most people need more time, expertise, or motivation to comb through a project’s code, looking for vulnerabilities and flaws. And those who do may be looking to exploit it for their own gain. This problem becomes even more relevant due to the speed at which the Web3 ecosystem is growing, with new technologies such as bridges, flash loans, and decentralized exchanges all being launched with potential vulnerabilities.
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