Asides from price volatility which is a common issue with cryptocurrency, hacking of crypto platforms is another serious problem in the industry.
In the past couple of months, several cryptos platforms such as Audius Network, Harmony, as well as NFT marketplace, OpenSea have been hacked. It is much of a concern for the companies involved, investors, and the crypto industry.
Web3, which is in its developmental stages has been questioned if it is a secure technology. This is because the latest of internet, web3, has many promising features.
In this post, we’ll find out if web3 cannot be hacked. Before then, let’s learn about web3 and its promising features.
What is Web3?
Web3 or Web 3.0 is called the next phase of the internet, which is expected to be decentralized and powered by cryptocurrency-based economies.
Web3 elements include decentralized finance (DeFi), non-fungible tokens (NFTs) and play-to-earn gaming, among others. Although the concept of Web3 is still in its early stages, there have been examples in our world today. One of such is seen in the world of NFTs.
Blockchain companies are also creating Web3 tokens. Some of the top web3 tokens include Helium, Theta Network, Chainlink, Polkadot, and so on.
The most talked about features of Web3 is in its play-to-earn gaming. Here, content creators and users can monetize their contents.
Some of the likely advantages of web3 are data security, scalability, and privacy for users to combat the influence of large technology companies.
How Does Web3 Work?
Web3 has components of blockchain technology. This makes it transparent and impossible to edit or falsify.
The main issue with blockchain technology has to do with its purported benefit. As it cannot be edited, this makes it hard to be protected against fraud. Once something exists on the blockchain, it’s impossible to remove.
One of the purported benefits of Web3 is that creators and users could monetize their efforts on the internet through the blockchain. Another benefit is that users could monetize their own data for targeted advertising purposes.
It has been suggested by Web3 proponents that control over decentralized services would be handed to users rather than big companies. Here, decisions of the companies would be taken by the users rather than the big tech companies.
Can Web3 Be Hacked?
As mentioned earlier, data security is one of the features of web3. In fact, security is one of it’s crucial features. This means that it is impenetrable to hackers.
However, hackers can target the vulnerabilities within the project’s smart contracts. Recently, hackers have targeted several DeFi platforms. Although DeFi is a subset of the Web3 spectrum, it reflects the biggest vulnerability within the ecosystem. This means web3 developers and entrepreneurs need to redirect their marketing budget to the development of the core system.
Although hack of web3 is not limited to external hackers, bad actors within the system may dupe the project and its investors. Recently, Velodrome Finance, a trading and liquidity automated market maker (AMM) firm was looted by one of it’s team members. An amount of $350,000 was recovered from the looter following an internal investigation.
It is therefore needed to put safety measures in place that will help not to tarnish the exciting features of web3.
How to Minimize Risk of Web3 Hack
Although hackers always have a new way of coming up with new strategies just as scammers use pig butchering scams today. There are however ways to fortify web3 against hackers and internal theft. They are discussed below.
1. Conduct Bug Bounty Initiatives
Bug bounties attract whitehat hackers, who try to identify vulnerabilities from a hacker’s perspective. Web3 developers are rewarded financially for finding and fixing valid bugs in the system. This should be a point for web3 entrepreneurs going forward.
2. Set up Multisig Wallets
Entrepreneurs must set up multisig wallets for storing funds and avoid centralized control over the wallets. Such measures, when implemented across the system, reflect a greater decentralization and insulation from orchestrated attacks.
3. Put in Place Fail-Safe Mechanism
To curb internal threats, fail-safe mechanisms with watered-down access to employees are required to avoid internal attacks.
Is there Any Issue with Web3?
Web3 is still in its developmental stages and has shown good signs with its implementation today. However, questions have been raised about web3 by some industry experts.
This include a loss of privacy due to more expansive data collection, potential for low moderation and the proliferation of harmful content, etc.
Conclusion
Hacking is one of the biggest issues faced in the crypto industry today alongside the issue of price volatility that has made the market bearish for some months. Web3 as a whole cannot be hacked but its component, DeFi is vulnerable to attacks.
Conducting bug initiatives, setting up multisig wallets as well as securing a fail-safe mechanism will help to minimize web3 hack risks.
