As we embrace the blockchain technology in various industries to make crypto transactions, mint and exchange NFTs, deploy smart contracts, and build the metaverse, there are top blockchain security risks that we have to consider and address.
The underlying strengths of blockchain include decentralization and cryptography to secure digital assets and build trust. However, due to poor technical design and implementation as well as improper use and maintenance of various components such as digital wallets, certain security and privacy risks may arise.
Some of the top blockchain security risks may be unnoticeable to the average users of the blockchain yet they may cause devastating damage such as identity theft of stolen digital assets. Some of these cybersecurity risks may be today’s common threats which spillover into the blockchain domain such as phishing attacks, identity theft, and endpoint vulnerabilities, and new risks may be around private keys and digital wallets. Other more technical security issues may include 51%, routing, and Sybil attacks, or malicious nodes that we mention in this article.
The complete set of security and privacy risks in Web3 is unknown to the industry experts and will most likely evolve as we develop new ways to identify ourselves with digital identifiers, store and exchange information, own digital assets, make payments across the globe, invest, and live in the interactive digital life of the metaverse that is an extension of our physical life and preferences.
Top Blockchain Security Risks
One of the possible attacks against blockchain is the routing attack which relates to the Internet Service Provider partitioning the network when IP prefixes are hijacked.
In a delay attack, the blockchain network communication can be delayed in the ISP traffic which can result in double spending.
In a blockchain network, users interact with endpoints such as phones and computer devices in which cases hackers can steal private keys and monitor user behavior.
While difficult to execute due to hardware costs involved, in a 51% attack, a group of miners or just a miner controls over 50% of a blockchain network to gain hash or validator control.
In a blockchain based phishing attack, scammers persuade crypto owners through impersonation to share their private keys or password to their crypto wallets which can lead to stolen digital assets.
In a Sybil attack, scammers create a multitude of fake identities which appear as legitimate IDs to take over and influence the network. This is mostly possible in decentralized networks and can be mitigated through a consensus algorithm to ensure that only legitimate nodes join the network
Private Key Theft
While a brute force attack is deemed impossible on a blockchain network such a Bitcoin, private keys can be stolen or leaked which will allow someone else to access user wallet.
Blockchain nodes are designed to ensure that only trusted data is processed as they store a copy of the blockchain ledger and validate blocks and transactions submitted by other nodes. Malicious nodes when working together can create a large pool of nodes to influence the voting and decision making process for adding a block to the network.
Identity Theft and Fraud
While blockchain can solve many of todays’ centralized identity management problems such as identity theft, scammers may target the weakest link in the blockchain security by targeting users who have more control over their digital identities and assets in a decentralized network. For example, a person’s avatar in a metaverse setting which represent an actual person may be taken over to harm others or a person’s private keys may be stolen to attack wallets.
Digital Wallet and Crypto Theft
As more users self-manage their own crypto wallets, there is always a risk that digital wallets become victims of scammers who target users’ private keys to access digital assets stored in a wallet.
Metaverse Security Training
Identity Management Institute continues to be at the forefront of evolving security and privacy risks by sharing content that raises awareness of the risks and administering certification programs to educate industry professionals and offer solutions. IMI is the creator of the Certified Metaverse Security Consultant (CMSC) certification program which was launched in 2022. Cybersecurity professionals are encourage to get certified and also join the Metaverse Security discussion group to stay up to date and exchange information.