Web3 like every other technological innovation comes with its own vulnerabilities. In this article, we would be examining the challenges and solutions to these vulnerabilities.
It’s almost impossible to discuss technology without mentioning the latest web evolution, Web3. Since the year 2021, it has waded its way to becoming one of the most searched items on Google.
Regardless of the many perks associated with this technology, it comes with its own set of concerns, and how Web3 develops in the coming months and years is becoming increasingly scrutinized.
The overall security of Web3 and what kinds of security threats remain unaddressed in its architecture are two major topics of debate. Which leads us to ask: is Web3’s security superior to Web2’s?
With the metaverse in full swing, the combination of these two technologies working together might completely transform the cybersecurity landscape.
During the relatively short history of the underlying technologies, blockchains have already experienced numerous serious security breaches. The Wormhole bridge, an interoperability technology that allows users and decentralized applications to exchange assets between blockchains, was the subject of a recent incident.
A hostile actor was able to mint 120,000 ETH (roughly $360 million as of this writing) by abusing a bridge to the Solana blockchain due to a weakness in the way a smart contract function was designed.
This post will look at the current Web3, its vulnerabilities, challenges and solutions. Before we dive into the weeds of Web3 security, let’s take a quick look at what Web3 is all about.
What is Web3?
Web3 is the term given by computer experts to the concept of a new type of internet service based on decentralized blockchains, the shared ledger systems used by cryptocurrencies such as Bitcoin and Ether.
It is the third generation of the internet, in which websites and apps will be able to handle data in a clever human-like manner using technologies such as machine learning (ML), Big Data, and decentralized ledger technology (DLT), among others.
Tim Berners-Lee, the inventor of the World Wide Web, dubbed Web 3.0 the Semantic Web, with the goal of creating a more autonomous, intelligent, and open internet. Prior to the development of Web3, there were Web1 and Web2, each with its own set of features, benefits, challenges, and restrictions.
In Web3, data will be interconnected in a decentralized form, which would be a big leap ahead of our present generation of the internet (Web 2.0), where data is largely housed in centralized repositories.
Web3’s development raises a number of security problems. One of the most difficult aspects of safeguarding dApps in the new Web3 era is enlisting the help of security specialists. Web3 and blockchain technologies have been dismissed by a number of cybersecurity professionals as fads at best and frauds at worst.
A large part of web3 security relies on blockchains’ unique capacity to establish promises and withstand human interference. However, the related trait of finality – the fact that transactions are often irreversible – makes these software-controlled networks a possible hacking target.
Indeed, as the value of blockchains – the distributed computer networks that underpin web3 – and its associated technologies and applications rises, they become more desirable targets for attackers.
Despite web3’s variations from past internet versions, we’ve noticed parallels with historical software security patterns. In many situations, the most serious issues are the same as they have always been.
All of this raises the question of whether to stick with Web2 and ignore Web3, because while you almost never come across opportunities to steal $1 million dollars with the knowledge of an exploit and the click of a button in Web2, that’s exactly what’s at stake in decentralized finance every day and much more.
In a truly permissionless environment, if there’s a bug in the code, whatever user funds are in the smart contract could be immediately stolen by a third party. Large transactions in DeFi do not require checks, unlike wire transfers in traditional finance.
Despite web3’s distinctions from past incarnations of the internet, we’ve discovered parallels with previous software security patterns. This takes us to classify these vulnerabilities, and we would be classifying them into 7 respectively.
Top 7 Web3 Vulnerabilities
Below are top 7 Web3 vulnerabilities
- Smart contract logic hacks
- Ice phishing
- Rug pulls
- Data manipulation in Dapps
- Data confidentiality
- NFT exploits
Cryptojacking is a sort of cybercrime in which a criminal surreptitiously generates bitcoin using the processing resources of a victim.
This generally happens when a victim unintentionally downloads software containing harmful scripts that allows a cybercriminal to get access to their computer or other Internet-connected devices, such as by clicking on an unfamiliar link in an e-mail or visiting a malicious website. The thief then uses programs known as ‘coin miners’ to produce, or mine,’ cryptocurrencies.
Cryptocurrencies are created using just computer programs and computational power since they are digital money. Monero is a sort of cryptocurrency that is largely mined on home computers.
Challenges: Cryptojacking uses victims’ computers to mine, or do the calculations required to update cryptocurrency blockchains, resulting in the creation of new tokens and the generation of fees.
These new tokens and fees are placed into the attacker’s wallets, while the victim is responsible for the costs of mining, which include power and computer wear and tear.
Solution: Make use of reliable cybersecurity software. It is far better to install security before becoming a victim, as it is with all other malware safeguards. Installing the most recent software updates and patches for your operating system and all apps, particularly for web browsers, is also a smart idea.
To avoid cryptojacking while accessing websites, ensure sure each one is on a whitelist that has been thoroughly reviewed. You can also block known cryptojacking sites, but this may leave your device or network vulnerable to new cryptojacking websites.
#2. Smart contract logic hacks
A smart contract is a computer program that both specifies the contents of a contractual agreement and operates the implementation of that content, on the basis of triggers given by the users or derived from the environment.
Challenges: Smart contracts rely on blockchain, the technology that enables record-keeping for the Bitcoin network and other cryptocurrency platforms.
Smart contracts “live” on decentralized blockchain networks, meaning the data’s security is dependent on the protocols implemented to keep it safe.
This new attack targets the logic inherent in blockchain services. These hacks have been used to exploit a wide range of features and services, such as interoperability, crypto-loan services, project governance and wallet functionality. Smart contract logic hacks also present serious legal problems, as smart contracts are sometimes not protected by the law or are scattered among jurisdictions.
Solution: Consider the nature of the blockchain and smart contracts at each level, from planning and development through pre-release testing, to account for Blockchain characteristics. Smart contracts are software with open-source code and storage, so keep that in mind.
You might also study programming languages and Blockchain platforms. Make certain that your smart contract developers adhere to the platform’s guidelines.
Overall, smart contract security involves a combination of code and tools, as well as the people who create them. There’s always the possibility of overlooking certain flaws.
#3. Ice phishing
“Ice phishing” is a comparatively recent word. For those who are unaware, it refers to deceptive operations aimed at coercing users into signing transactions that allow cyber attackers to utilize tokens.
Delegating token usage permission is a popular form of smart contract transaction, particularly for DeFi smart contracts. The practice of ‘ice phishing’ does not entail obtaining one’s private keys. Rather, it includes duping a user into signing a transaction that gives the attacker approval over the user’s tokens.
Challenges: It persuades naïve users to sign transactions giving the attacker control of their tokens. This is frequent in wire transfers and PayPal scams, when people are duped into thinking the money is coming from a friend or loved one.
The use of properly created graphics is one of the most successful strategies of ice phishing. To deceive visitors into clicking buttons and completing financial transactions, these pictures employ a number of approaches.
Solution: While employees are taught to be kind and courteous, it is good to be vigilant while opening emails, particularly unwanted ones. Other measures to prevent icephishing assaults may be to thoroughly analyze websites and URL and also website logos.
#4. Rug pulls
A rug pull occurs when a malicious cryptocurrency developer abandons a project and flees with investor funds. Malicious individuals create a token, list it on a DEX, and then pair it with a big cryptocurrency such as Ethereum.
Challenges: The perpetrators push the coin’s price to zero by removing money from the liquidity pool. Their creators may even create a brief buzz on Telegram, Twitter, and other social media platforms by flooding their pool with liquidity in order to gain investor faith.
DEXs, as opposed to centralized cryptocurrency exchanges, allow users to publish tokens for free and without audit. Token creation on open-source blockchains such as Ethereum is also straightforward and free. Malicious actors make use of these two factors.
Solution: To prevent a rug pull, check the pool’s liquidity. But this is just the beginning. Examine the token pool for a lock. The majority of credible initiatives get money from a pooled fund.
#5. Data manipulation in Dapps
DApps, or decentralized apps, are Web 3.0 applications. The data will be kept in peer-to-peer networks and the codebase will be spread around the blockchain. Although DApps are built on blockchain and powered by cryptocurrency, some people were required to develop a blockchain campaign and launch the token. If you look at the numbers, you’ll notice that:
Challenges: Artificial Intelligence is widely used in many Dapps and smart contracts (AI). There is a substantial amount of high-quality data required to adequately train an AI on an issue.
A malevolent third party might exploit another type of vulnerability if Dapps or smart contracts are not adequately safeguarded.
By uploading low-quality or defective data, a third party might control or ransom the AI system, emphasizing the necessity of data in AI even more.
Solution: You’ll see that vulture capitalist and Silicon Valley insiders control a major portion of the blockchain sector. If you intend to create your Web 3.0 software on one of the blockchains, keep in mind that it might be shut down at any time due to the manipulation of a small group of people who control the big crypto market. As a result, before diving into Web3, extreme caution is required.
#6. Data confidentiality
Data will be stored on the blockchain via Web3. The data will be transparent and traceable. This portrays equality and real liberty, but also raises concerns about how to preserve users’ data privacy.
Constant data breaches jeopardize private information. On top of that, the content might be published inadvertently or stored in an insecure area. When computers scan data and store it in their knowledge base, the chances of private information being detected and utilized grow dramatically.
Challenges: With the pseudonymity in Web3 and significant opportunity for regulation loopholes, it may open the door for money laundering and financing of terrorist movements.
Cloning cryptocurrency wallets can be another sort of attack on data privacy. With the usage of seed phrases or keys to retrieve lost wallets, anyone can deceive users into supplying this information, uncover a flaw in the verification process, and finally steal whatever is saved in the wallet.
Solution: To prepare for a system that has the ability to transmit sensitive information quicker than ever before, cybersecurity executives must strengthen their defences.
#7. NFT exploitations
Non-fungible tokens, or NFTs, are playing a vital role in the mainstream acceptance of cryptocurrencies and helping define the future of decentralization, ownership, finance, and more as the Web3 world takes shape.
Although NFTs are a key component of Web3, there are many other methods to leverage Web3 to motivate your audience to take action, such as accepting bitcoin for privacy and borderless payments or leveraging the blockchain to store easily accessible data with a single updated record.
Challenges: Smart contracts are integrated into NFTs, which may be broken, manipulated, or abused. While NFTs are still in their infancy, it is critical to be aware of the dangers connected with their owners and to take the necessary safeguards to maximize profits.
Solution: It is irrational to disregard NFTs just because of security issues and weaknesses. In fact, you should seek out solutions that can assist you in gaining a better understanding of NFT smart contract vulnerabilities. Additionally, options for warnings about any suspicious activity on NFT markets and in your accounts are available. Learn more about NFTs to better understand their weaknesses.
As web 3.0 continues to take shape, more cybersecurity risks are expected to evolve. Regardless, it’s a good idea to think about privacy and security from the outset.
The future of the web without gatekeepers, information that matters to people, and artificial intelligence seem like a dream come true. To protect that ambition from becoming a nightmare, security should be incorporated from the start.
This article has explained top 7 Web3 vulnerabilities – the challenges and solutions, while you read this, let it not end here, do your research to keep you informed on the latest trends in the Web3 ecosystem.