Three On-Chain Cybersecurity Predictions for 2024
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2023 will be characterized by a strong focus on regulation and compliance, with bearish events flattening markets and large-scale disruptions and fraud events in 2022.
But things won’t be quiet for long in this industry, and change is already happening. The issue of Sam Bankman-Fried and Changpeng Zhao’s prison sentences remains unresolved, but the drama of the legal battle appears to be largely over and the industry is buzzing with anticipation of a new bull market as it looks ahead to the year. . from now on. The anticipated approval of a spot ETF and the upcoming Bitcoin halving are both adding to the speculation.
Changes in market conditions are good news, but they inevitably bring new challenges for web3 security professionals. Here are three macro trends that will shape the Web3 security landscape in the coming years.
Hacking and fraud are on the rise
Cybercriminal activity on the web3 unfortunately tends to follow the ebbs and flows of the market. Losses from cryptocurrency fraud in 2021, when Bitcoin (BTC) hit record highs, were 60 times the level in 2018, according to the Federal Trade Commission. However, Chainalytic’s latest data shows a decline in fraudulent activity. In 2023, it will increase by a whopping 77% compared to the previous year.
However, Chainalytic notes that certain types of fraudulent activity are actually on the rise, particularly impersonation scams. Moreover, if the market recovers in 2024, as many analysts expect, fraudsters will once again become interested in the financial opportunities of cryptocurrencies.
Ransomware increase in 2023 | Source: Chainalysis
Therefore, it is likely that not only will the number of frauds increase, but the level of sophistication and integration of fraudster activities will also increase. One example is advanced evasion techniques designed to conceal fraudulent activity. This includes spoofing, where a malicious entity impersonates a legitimate function and pretends to be harmless. morphing, where a fraudster changes the behavior of a smart contract depending on the situation; Obfuscation makes it difficult to detect and understand harmful code.
Off-chain signatures, which allow transactions to be signed without being broadcast to the blockchain network, are another area of vulnerability targeted by fraudsters. In signature phishing scams, attackers set up a fake dapp-like scenario that requires users to generate off-chain signatures for seemingly legitimate transactions. One example is providing a signature to list an NFT. Here, the user is accidentally signing a transaction that allows the fraudster to take all the NFTs out of the wallet.
The recent closure of ‘Draining as a Service’ Inferno Drainer, a toolkit that gave fraudsters a technical means to steal items from wallets, is undoubtedly good news for the industry. However, this is unlikely to be the last, as they reportedly stole $80 million worth of cryptocurrency this year alone. We expect to see more of this kind of integrated activity among fraudsters in 2024.
Expanding web3 cybersecurity capabilities
As fraudulent activities become more sophisticated, the web3 cybersecurity ecosystem has also added new features and tools to help combat fraud and illegal activity. Attack detection protocols have identified hacks that have already occurred, include $33 million was stolen from SushiSwap in April 2023 before the funds were withdrawn.
On-chain extensions, similar to wallet extensions, can further support threat prevention by using on-chain data to perform risk monitoring in real-time, providing an additional layer of protection for users and protocols.
Additionally, on-chain data and analytics will take on new dimensions due to the increased participation of TradFi and institutional liquidity, which will bifurcate the sector. The open, pseudonymous, and permissionless protocols that dominate the industry today will increasingly work alongside permissioned, compliant, and secure protocols. Additional layers of data and information increase the power and accuracy of risk profiling, which can become even more complex due to advances in AI and machine learning.
A more strategic web3 cybersecurity approach
With each market cycle, the maturity of the cryptocurrency and web3 space increases. Projects and companies are increasingly recognizing that they need to go beyond code audits to demonstrate their commitment to cybersecurity and stay one step ahead of fraudsters. You need a comprehensive strategy that starts with security design and continues with monitoring and threat prevention solutions.
Handling threats requires taking a holistic approach to risk, using preventive measures such as asset segregation and transaction screening combined with mitigating measures such as automatic circuit breakers along with reactive remedies such as insurance.
To meet this demand, providers like Forta have developed cybersecurity tools such as blockchain fraud detectors and attack detectors specifically designed to suit the needs and threats faced by Web3 operators.
As we move into 2024, palpable optimism has been long awaited and well deserved. However, keeping in mind the risks posed by increasing wealth and liquidity, Web3 companies must prepare for the new threats facing the industry and put all cybersecurity guardrails in place to keep their assets and users safe.
Source: https://crypto.news/scammers-on-the-rise-3-on-chain-cybersecurity-predictions-for-2024-opinion/
