From Meta (formerly Facebook) to venture capital firms, businesses are increasingly investing in Web3: by 2030, the global Web3 blockchain market is expected to reach over $33 billion, with many believing that the developing tech ecosystem will define the future of the Internet across the commercial, federal and consumer space.
But in spite of its many touted benefits – such as decentralization, better data security and increased user control – Web3 is poised to bring about new cybersecurity threats that very few businesses are prepared for, and which they are struggling with even now.
At Tenace, we recognize that cyber resilience is not just about tackling the threats that impact businesses in the present: it is also about preparing for the threats of tomorrow. In this article, we’ll explain what Web3 is, the risks it will bring to your business, and how we can help you to prepare for them.
The Background of Web3
Since its explosion in the late 1990s, the World Wide Web has gone through two iterations. The first (Web 1.0) was largely a fragmented cluster of lone websites, services and disconnected message boards – there was little for anyone to do or see.
Since then, the Web has changed in many ways: today it is dominated by user-generated content, mobile-oriented functionality and large social platforms monetized through programmatic advertising.
According to many, this paradigm – which now goes by the name Web 2.0 – is due for another overhaul in the form of Web3. But what is it, and how does it work?
Web3 Simply Explained
The term Web3 was coined by Gain Wood, co-founder of the Ethereum blockchain. Although the concept is surrounded by overwrought predictions and far-flung use cases, the idea is simple at its core: Web3 is a largely decentralized version of the Web powered by peer-to-peer connections with the help of blockchain and blockchain-powered services.
Despite the nascence of Web3 and its associated technology stack, various use cases have already come about and proven the feasibility of the concept. For instance,
• Cryptocurrency – a digital currency comprised by fungible units of data protected by encryption and verified without the help of a centralized entity. Aside from well-known cryptocurrencies like Bitcoin, government-backed cryptocurrencies have emerged in multiple countries.
• Non-Fungible Tokens (NFTs) – much like cryptocurrency, NFTs are digital assets stored on a blockchain. Unlike cryptocurrencies, each one of these assets are unique, allowing them to be used for file ownership, software licenses, authentication and much more.
• Smart Contracts – like cryptocurrency and NFTs, smart contracts are stored on a blockchain; unlike cryptocurrency and NFTs, they are not merely units of data, but programs that automatically execute an agreement when its conditions are met.
This list is by no means exhaustive – and as Web3 develops, the number of potential use cases is liable to expand in ways that could fundamentally change the way we live, work and do business.
How Web3 Will Benefit Businesses
Today, most organizations are dependent on the Web to collaborate, share information and reach new customers – any major shift to the way the Web works will also transform their business processes in positive ways.
- Supply chain management – because blockchain provides an “immutable” record of transactions, it is ideal for tracking products as they move from location to location, providing transparency, trust and traceability to supply chains.
- Marketing and Advertising – much like Web 2.0, Web3 will provide new ways to reach customers and personalize a message for an audience.
- Better customer experience – in the Web3 ecosystem, users have greater control over how their data is used. This means better privacy and higher brand trust, bringing helping organizations to retain and please their customers.
- Rich collaboration – decentralized applications enable seamless and more secure collaboration on projects. When combined with the Metaverse, Web3 will also provide a richer experience for remote employees in hybrid workplaces.
Web3 Cyber Threats
Web3 also brings new threats, and some of them are affecting businesses even now:
- Cryptojacking – cryptojacking occurs when malicious actors compromise systems and use compute power to mine cryptocurrency for themselves. According to a report from Reason Labs, almost 60% of all Trojan activity detected in 2021 was comprised by cryptojackers which drain system resources and drive up energy costs.
- Phishing attacks – phishing attacks are already a major problem with Web 2.0, and the main cause of security incidents across organizations. Web3 will provide phishing actors with increased channels and incentives.
- Malicious NFTs – NFTs can be weaponized with malicious code that drains crypto wallets, installs malware on users’ devices, and worse. A weaponized NFT attack already occurred on the “OpenSea” marketplace earlier this year, and more can be expected as Web3 adoption increases.
- Financial fraud – companies using blockchain to process transactions in a decentralized way can lose that money through various kinds of attacks, including 51% attacks that target the underlying blockchain.
Ultimately, the biggest threat to Web3 is that it’s a highly complex and new approach to the Internet. The threat vectors that malicious actors use will be unpredictable – as always, they will constantly innovate new ways to reach users and compromise organizations to their detriment.
Partner with Cybersecurity Experts
The best way to protect your cyber resilience over the long term is to choose a tech partner with the knowledge and expertise to not only insulate you against the threats of today, but also the threats of tomorrow.
At Tenace, we build our IT solutions with best practices for risk, cybersecurity and compliance, providing flexible and affordable services that keep your business safe from cyber actors, data breaches, ransomware attacks, and worse. To learn how we can help, call us today.