Blockchain Security — The New Threat. Part 1.

A new threat is on the horizon.

And this new paradigm promises to be the most profound shift for security professionals since the dot-com boom of the nineties.

I’m talking about blockchains and decentralized economies in the 2020s

To get a sense for the scope of change in front of us, we need to take a trip down memory lane – to the advent of the internet.

During its infancy, the original internet was designed to be decentralized. With today’s tech giants looming large over every part of the internet, that’s kind of hard to believe. But it’s true. In the early days, the internet had a very practical purpose – to withstand a nuclear blast. Think about it: A network of computers all talking to each other from around the country do not have a single point of failure.

This decentralization turned to centralization as the 1990s went on. While your average internet user could, in theory, create their own webpage, most were bystanders who viewed already-made webpages instead. And while, in theory, you could still create your own email server today, the truth is that it’s a lot easier to just use Gmail. Hence the moving of the goal post ever so gradually toward centralization.

As the economy recovered from the wreckage of the dot-com boom and bust, the world embraced the internet and the economy huddled around Big Tech companies who successfully carved out their corner of the internet. Such as:

• Microsoft and its Windows operating system.
• Google and its search engine.
• Facebook and its social network.

The rise of these internet startups brought with them a new threat, and online security exploded.

Before Web 2.0 – the web we use today — thousands of users and businesses logged onto the first iteration of the web, wholly unaware of the tenuous security landscape.

Early antivirus software emerged, but its signature-based system produced false positives too often to be reliable.

Malware exploded from tens of thousands in the early nineties to more than 5 million by 2007. And, by the mid-nineties, it became clear that cybersecurity was needed on a scale never seen before. This gave rise to heuristic detection to cope with the influx of new threats.

As we move into the next iteration of the web – Web3 – we are on the cusp of another generational expansion — the expansion into cryptocurrencies and the blockchain revolution. And the similarities to the dot-com boom are uncanny.

In each era, you have a new tech with limitless potential that very few folks truly understand. You have thousands of companies popping up hoping to commercialize that new tech with crazy new ideas and a ton of money flowing into the space.

Most of the dot-com startups that sprouted up in the late 1990s were bankrupt by 2003. And many of the biggest companies during the internet bubble – companies like Cisco and Intel – have, indeed, gone on to change the world. Cryptocurrencies seem to be on the same trajectory, and they will likely change the landscape over the next two decades… for better or worse.

The Promise of Blockchain and Web3

For the hardcore Web3 proponent, the third coming of the internet is strictly about decentralization. 

The internet has come a long way since its inception. We’ve gone from a static, text-based web to a dynamic, multimedia one. But as the web has evolved, so too have the threats that emerge to exploit it.

In the early days of the internet, we used simple text-based interfaces to navigate the web. This was fine for basic information retrieval, but it quickly became clear that this approach was not going to be sufficient for the increasingly complex tasks we wanted to do online.

So, we developed graphical user interfaces (GUIs), making it possible to interact with the web in a more intuitive way. With a GUI, you could point and click your way around the internet, and even manipulate data in a more natural way.

Today, we want to do more than just retrieve information or buy products – we want to be able to interact with others, create and share content, and even earn money online. And we want to do it without compromising our security.

That’s the big promise of Web3 and blockchain.

Web3 is the next evolution of the internet, one that puts users first by giving them control over their own data and identity. With Web3, you can do all the things you’re used to doing online, but without having to give up your privacy or hand over your personal data to Big Tech companies.

Instead of being controlled by a few large corporations, Web3 is powered by the collective effort of its users. And because it’s based on decentralized technologies, Web3 is more resilient to censorship and shutdowns than the current internet.

Allegedly.

To understand Web3, we need to look at blockchain.

Thanks to Bitcoin and Ethereum — two of the world’s stalwart cryptocurrencies – “blockchain” has become a household term.

When Bitcoin first came on the scene, its promise was one of pure decentralization – send money without the need for profit-grabbing middlemen at the banks and keep everyone in check with digital incentives rather than regulations.

This technology has the potential to revolutionize how we create, store, and manage data. As such, with blockchain powering the next iteration of the internet, we’re on the precipice of a new internet that is –in theory – more secure, efficient, and transparent.

Why?

Well, at its core, blockchain is a decentralized ledger. It records transactions without the need for a central authority to update it. This ledger enables innately untrustworthy individuals and entities to collectively create trustworthy systems, without the need for any central authority – hence the term “disintermediation.”

Blockchain enables humans to remove the middleman from legacy systems and replace them with a collective ledger. By removing and replacing them with an automated and incorruptible technology, we can make today’s systems and processes more trustworthy, faster, and cheaper.

The applications here are theoretically infinite.

Even Visa, the legacy payments giant, is integrating blockchain technology.

Visa’s executives are betting on decentralized finance and blockchain as the future, and as such, as a major threat to payments business. To stay ahead of the curve, Visa’s R&D teams are creating their own blockchain interoperability hub, which promises to connect different blockchain networks into a single channel. This would facilitate the transfer of digital assets between different blockchains.

These isn’t an inconsequential idea. Interoperability in the blockchain world introduces a slew of security challenges, as this idea is critical to Web3 which aims to apply the main concepts from the blockchain to all aspects of your digital identity and life.

We can’t ignore the security “gaps” within the promise of blockchain decentralization. And these gaps become will become wider as more blockchains are created and interact with one another.

We’ll explore these threats in detail in Part 2.

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