Tech giants such as Amazon, Google, and Microsoft have a strong grip on today’s internet. It’s a centralized model that puts considerable power in the hands of a few large cloud operators. And the arrangement has changed the way that software is deployed and where data is stored. Users enjoy many benefits, but it’s not the utopian vision of the internet that many hoped for. Web3 has the potential to change that, but developers will need blockchain security tools to safeguard its long-term success.
What is Web3?
Web3 is a decentralized approach to managing information on the internet. It puts users back in control of their data and enables them to profit from their efforts – for example, through micropayments or other digital rewards. Web3 comes with a host of practical features enabled by blockchain that bring the concept of digital currency to new applications. And there are many reasons to move towards a decentralized way of doing things on the web.
Having information assets centralized in the cloud is problematic when the arrangement concentrates data into a big target for bad actors. The number of data breaches suffered by firms highlights that current defenses are inadequate and points to the merits of shifting to a different model. Web3 decentralizes information held on digital ledgers and makes it much harder for adversaries to block access to company data and hold firms to ransom.
Blocks of data, chained together, can be digitally signed to link entries to real-world stakeholders. And because their integrity is bound up in so-called hash functions, which convert digital data into unique codes, any attempt to manipulate entries means that numbers no longer add up. For example, changing just one letter in a novel would produce a completely different hash value, which highlights just how effective these functions are at providing an integrity check.
Blockchains also make it possible to write smart contracts – for example, software that pays a commission to its original authors whenever a license is activated using digital currency. Tokenizing data transactions paves the way for device owners to offer spare computing or data storage capacity to other users and receive income. And changes in the method used by nodes on the network to reach consensus mean that blockchain’s energy footprint has been significantly reduced.
Additions to a digital ledger need to be verified, and one way of doing that was to solve complex mathematical puzzles – an approach dubbed proof-of-work. Such schemes make it hard for one actor to dominate and control the decision-making process, because the amount of hardware required is prohibitive. But the approach is energy intensive and disruptive – for example, the popularity of Bitcoin mining pushed up the price of GPUs and diverted energy from more useful endeavors. Today, consensus is more commonly reached via proof-of-stake, where committees on the network risk losing the bulk of their rewards should they be tempted to rig the vote.
Another complaint against the use of blockchains is processing speed. In their original configuration, where each node has to be aware of the entire blockchain, systems are slow. In the time it takes for mainstream payments services such as Mastercard and Visa to process tens of thousands of transactions, early cryptocurrency systems would have written just a handful of entries to their decentralized digital ledgers.
But ecosystems such as Near – one of a multitude of modern blockchain platforms supporting decentralized app developers – are borrowing techniques used to streamline the operation of giant databases. Breaking blocks into smaller chunks known as shards reduces the workload of individual nodes and makes protocols more scalable. Nodes don’t need to process and store the blockchain in its entirety, but can instead be responsible for just a section of it. And they can reach out across the peer-to-peer network to other shards when they need more details to complete a task.
Blockchain security tools
However, as Web3 infrastructure becomes more accomplished – and popular as a result – it grows as a target for bad actors. Decentralized peer-to-peer networks may be more resilient to attacks, but that’s not to say that security can be put on the back burner. Fortunately, developers can draw upon an increasing number of blockchain security tools to find and fix vulnerabilities in the apps that they are creating.
Just as you would use static code analysis to support the development of secure software designed for today’s web, users can benefit from tools that reach into the Web3 domain too. For example, Semgrep’s static analysis security tool features rules for smart contracts to warn decentralized finance providers of vulnerabilities that may be sitting in development code. The firm also has an open source software scanning engine that can alert Web3 teams to issues arising from third-party integrations.
Consensys provides smart contract testing for customers to help developers make sure that apps are ready for launch. Other smart contract auditors include Certik. And AnChain.AI has introduced what it claims is the world’s first Web3 security operations center. Halborn, which completed USD 90 million Series A funding in July 2022, is a Web3 security firm that works with clients using distributed ledger technology in areas such as finance, application and game development.
Organizations wanting to learn more about how to benefit safely from decentralized finance opportunities, as well as trace and understand blockchain activity in more detail, can reach out to a number of experts. This list includes Chainalysis and Ciphertrace. Over time, blockchain security tools will make Web3 a safer place to do business. But if companies do find themselves caught out, it’s good to know that expertise is available to explore suspicious activities and help trace stolen funds.
