Web3 Security and Business Risks you must know

As a Web3 user, it’s essential to know blockchains’ associated risks and challenges.

Emerging technologies can often house large numbers of criminal activities due to the lack of structure. Blockchains are one such technology — massively celebrated and utilized, but with signs of high risk. Several serious Web3-related crimes have ended with individuals and companies losing millions.

Web3, with DeFi and NFTs, has become the hottest spot for criminal communities to breed and expand as this industry is still in its formative years of discovery and innovation. As new users and enthusiasts of Web3, we must learn the various problems often perpetrated as fraud on the blockchain. These crimes and risks have affected the overall growth, demand, and innovation in this industry, raising questions about the level of security it can offer.

Financial crimes and risks in cryptocurrencies

Smart contract hacks:

Tutorials on Smart contract hacks are abundant on Youtube. That’s how commonplace this is in the burgeoning industry. Smart contract hacking typically involves manipulating the code in a smart contract, targetting the logic encoded in blockchain services.

Smart contract hacks challenge the basic functionalities of a blockchain, such as interoperability, governance, loans, and wallet operations. Every instance raises the question of blockchain safety and whether there are sufficient laws, regulations and legal exercises around them.

Cryptojacking:

Unsurprisingly, it is a form of cybercrime when a criminal hacks into a device or a network and quietly installs crypto mining software. Cryptojacking is when someone gains unauthorized access to a computer to mine cryptocurrencies.

Usually, Cryptojacking is intended to make large profits without bearing the expenses that come along with it. But unlike other crimes, this stays entirely hidden from the victim.

Rug pulls:

Rug pulls are a newly surfaced scam that involves hyping a non-existent project. The name is derived from the expression “Pulling the rug out.” These attacks require expertise and insiders — developer communities, criminal groups, fake influencers, and more.

How it works is that a developer attracts investors to a new cryptocurrency project and creates hype around it. They pull out before the project is even built, leaving the investors with a worthless currency.

Ice phishing:

It is one of the most commonly occurring crimes on Web3 technologies. Ice Phishing is a type of crime that fools the user into signing a transaction that entrusts the consent of their tokens to the attacker.

Perpetrators get unsuspecting users to sign malicious smart contracts that would redirect tokens from non-custodial wallets to an attacker-controlled address instead of their own.

Identity-related risks:

Self-sovereign identity, pseudonymity, and anonymity have their downsides. Most SSI and crypto wallets include inefficient onboarding, private key education, and multiple versions with little interoperability.

Anonymity can confuse, and as web2 bots have demonstrated, it can raise questions about accountability, liability, legal recourse, and user protection. Pseudonymity creates data gaps for regulators and opens doors for money laundering and terrorist financing. Read our previous article to learn more about the North Korean hacking group crimes.

With these growing blockchain crimes, we need regulatory and government bodies to add more security and trust to this ever-increasing technology.

Astra Protocol, with its decentralized legal network, aims to maximize trust in Web3. Through its KYC and AML, legal jurisdiction, and feedback tracking processes, Astra Protocol combines the best features of Traditional Finance to amplify the adoption of DeFi.

Astra Protocol is on a mission to eliminate the various crimes in the DeFi and Web3. With superior technology and expertise from major accredited law firms, Astra Protocol ensures to solve all disputes optimally and on-chain. It authenticates users before they are allowed into the ecosystem, preventing bots and hackers from infiltrating the space.

Astra Protocol is a solution to make Web3 safer. Though decentralized compliance is still a developing subject, Web3 security is critical for mass adoption and financial evolution, and Astra can surely achieve that.

Astra — A Decentralized Compliance Layer for the Web3 Economy and Delivering the Compliant Blockchain for the future.

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Astra Protocol

Astra’s mission is to provide a range of regulatory compliance tools for crypto applications and across the Web3 industry. www.astraprotocol.com