Traditional and blockchain cybersecurity
Web3 enthusiasts often suggest replacing traditional security systems with decentralized solutions. However, this reordering is incorrect because the two types of security solutions serve different purposes, and Web3 projects can still benefit from traditional security frameworks.
Security is one of the most frequently cited advantages of blockchain over traditional databases and financial networks. In fact, data stored on blockchain cannot be modified, manipulated, or destroyed, unlike data stored on regular servers. Nevertheless, there is a lot of confusion between the two different concepts of blockchain security and blockchain-based security.
Let's clarify the differences between these concepts and the limitations of distributed systems. Stefan Huber, CEO of BlackFort, the first L1 network to offer a multi-chain wallet with built-in antivirus functionality, commented:
“What most people don’t understand is that on-chain and off-chain security solutions are complementary, not substitutes. Industries like healthcare and manufacturing are While it can definitely benefit from identity management and access control, Web3 also requires a regular cybersecurity framework, as some features are too expensive to replicate on-chain.
blockchain security
Blockchain security is an umbrella term that covers the systems, solutions, and practices used to protect blockchain networks, decentralized applications, funds stored in smart contracts, and users who interact with blockchain from malicious attacks. It is a term.
These solutions and practices can then be categorized into two types: blockchain-based and non-blockchain-based. For clarity, here are some examples: Please note that these are just examples and are not an exhaustive list.
1) Security solution using blockchain
- Multisig wallet: Wallets that require multiple signatures to perform transactions. Used to prevent unauthorized fund transfers in Web3 projects.
- Decentralized oracle: Smart contracts often require off-chain data (such as cryptocurrency prices). Using one or more decentralized oracles prevents malicious attackers from providing false information to these contracts.
- Gas fee: Surprisingly, non-zero gas fees are one of the best deterrents against a common attack type: DDoS. These spam attacks discourage perpetrators by making them costly.
2) Security solution that does not rely on blockchain
- Web3 antivirus: These apps detect cryptocurrency scams, malicious smart contracts, and phishing websites, and warn users before signing potentially harmful transactions. Often available as a browser extension, some advanced wallets also include this feature as a built-in security measure. BlackFort Exchange Network CEO Stefan Huber continued, “When a user initiates an interaction with a dApp smart contract or wallet address, the wallet’s integrated antivirus scans it against a database of known scams and prevents the transaction. and immediately notify the user if it is safe to continue connecting to the dApp or sending crypto to a given address.
- Asset manager: These are market players that secure digital assets for others. Although custodians typically use cold multisig wallets and other blockchain-based solutions to protect client funds, the custodian-client relationship remains traditional, with signed documents and off-chain It involves fees paid in.
- Multi-factor authentication: Good old MFA, especially with biometric authentication, is an effective way to secure your cryptocurrency wallet.
Blockchain-based security
The term “blockchain-based security” refers to security systems and tools that use blockchain as an integral part of the technology. Such tools can be used in Web3, Web2, or real world economies.
The most interesting use cases for blockchain-based security solutions are:
- supply chain: Valuables and packages can be assigned a unique blockchain ID to ensure authenticity and track the movement of goods. Perhaps the most important use case for blockchain in supply management is its ability to prevent ransomware attacks.
- Internet of Things: Blockchain is used to authenticate individual devices (such as sensors) and accounts before accessing IoT networks. This helps prevent data breaches, phishing attacks, malware installations, and more.
- Data security: Blockchain helps protect data and regulate access to sensitive files. For example, financial and medical records are often stolen and sold on the darknet, but such breaches can be prevented if access requires the use of private blockchain keys.
Conclusion: The most important human factor
To effectively protect Web3 projects and user funds, blockchain-based solutions must be used in conjunction with traditional cybersecurity solutions. After all, the Web3 platform still runs on virtual servers like AWS, and user-side wallets run on legacy devices.
At the same time, we must not forget the most important element of cryptographic security at the end-user level. It is a good practice to protect your crypto wallet's secret phrase, private key, and password.
Most crypto thefts are not due to code abuse, but rather wallet owners inadvertently exposing their seed phrases or private keys, clicking on fake airdrop links, or victims of SIM swapping scams. It occurs by becoming.
To make matters worse, Web3 projects often have their social media and GitHub accounts compromised and used to steal money from end users. This shows that employees at blockchain projects often do not follow good cybersecurity practices.
Understanding how hacking, cryptocurrency fraud, phishing, and social engineering attacks work is perhaps the most important aspect of blockchain security. No blockchain security solution will be sufficient to protect Web3 assets without educating both end users and project team members.
