The 5 most common security concerns in the Web 3.0 world

Issue 3 2022 Cyber Security


Fady Younes.

Cisco Talos has revealed the top five security risks in Web 3.0. This latest iteration of the world wide web will include the immersive 3-D experience known as the “Metaverse” – a virtual reality environment where people can explore, shop, play games, spend time with friends, attend a concert, or take part in business meetings.

“As the internet morphs into the metaverse, a whole new range of opportunities, capabilities and features are opening up to users, institutions, governments and businesses. Despite all these possibilities, Web 3.0 is also seeing increasing security threats that can be exploited by hackers and criminals. The team of researchers at Cisco Talos has done a deep dive to highlight the most common security challenges, driven by cryptocurrency, blockchain technology, decentralised applications and decentralised file storage. Plus, they offer insights on what users should look out for to stay safe and protected while online,” said Fady Younes, cybersecurity director, Cisco Middle East and Africa.

ENS domains

The growing popularity of digital currency has resulted in greater use of Ethereum Name Service (ENS) domains. ENS domains are an easy to remember name used to find the associated cryptocurrency wallet address. This has led to popular domain names being trademarked and resold by third parties. As a result, nothing prevents the owner of an ENS domain from using that name to trick unsuspecting users into believing that they are dealing with a legitimate organisation. In addition, these ENS domains point to wallet addresses, so any person can inspect the contents of the wallet associated with the name at any time.

Social engineering

Adapting to a new technology often comes with the threat of social engineering and Web 3.0 is no exception. Most security incidents affecting Web 3.0 users stem from social engineering attacks such as cloning wallets. Users should be careful not to be tricked to share their “seed phrase”. If a cryptocurrency wallet is lost or destroyed, a user can recover their wallet, and all its contents, using a 12 to 24 word “seed phrase” which is essentially their private key. Anyone with knowledge of the seed phrase (private key) can clone a cryptocurrency wallet and use it as their own. Thus, many cybercriminals who are seeking to steal cryptocurrency or NFTs (non-fungible tokens) target a user’s seed phrase.

Beware of fake customer support agents

Another method attackers use to separate users from their seed phrase is to pose as a customer support agent responding to publicly posted Twitter or Discord server requests from users. Criminals monitor these channels and will contact users to offer “help”, ultimately bringing them to share their seed phrases.

Whales

Whales are high profile cryptocurrency accounts that hold a large amount of cryptocurrency or NFTs. Some estimates report that 40 000 whales own 80% of all NFT value and as such are an attractive target for cybersecurity criminals. Scammers know that many smaller investors watch these whales’ wallets and will therefore socially engineer them into investing in their own fake projects. Most legitimate NFT projects freely publish their source code for their smart contract. The fact that this project’s code has not been published should be a red flag for potential investors.

Malicious smart contracts

While some attackers focus on exploiting bugs in legitimate smart contracts, other attackers take a different approach, and write their own malware which is placed onto the blockchain in the form of malicious smart contract code. Malicious smart contracts have all the standard smart contract functions but behave in unexpected ways.




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