Web3 companies and individuals lost nearly $4 billion last year due to fraud and cybercrime, according to a new report.
Web3 is the idea behind the possible next version of the Internet, built on decentralized solutions, blockchain and a token-based economy. It has gained prominence in recent years, following the exponential growth of Bitcoin, Ethereum and other blockchain solutions, despite little concrete returns so far.
As more organizations started building new systems, scammers quickly came out of the woodwork, and now Web3 bug bounty provider Immunefi claims that exactly $3,948,856,037 worth of cryptocurrency was lost in the Web3 ecosystem in 2022 due to scams , break-ins and fraud.
Improved security
Most of the incidents took place in the BNB chain (Binance network – 65 incidents) and Ethereum (49).
On the positive side, the researchers say, overall losses have more than halved (51.2%) year-on-year. In 2021, the industry lost $8,088,338,239.
However, the constant fight against fraudsters does not slow down the development of the industry. Immunefi expects it to grow from $3.2 billion last year to $81.5 billion over the next seven years, increasing its CAGR by 43.7%.
“Web3 is still a whole new world, full of unknown paths,” said Mitchell Amador, founder and CEO of Immunefi. “This novelty by definition causes inexperience and danger in the game. Moreover, due to the very nature of the Web3 ecosystem, where smart contract code contains huge amounts of capital, the environment is much more hostile compared to traditional Web2 applications.”
Amador recommends that to safely navigate these uncharted waters, CISOs and other security leaders should invest in security education. This education should go beyond endpoint protection (opens in a new tab)phishing and social engineering into things like cryptocurrency wallets, private keys, and popular DeFi (decentralized finance) apps.
Alex Mashinsky, the former CEO of failed crypto lender Celsius, was recently indicted by the New York Attorney General for fraud, in one of the many crypto firms going bankrupt last year. In addition to Celsius, FTX, 3 Arrows Capital, BlockFi and many others were forced into bankruptcy last year.
Through: VentureBeat (opens in a new tab)