Avoiding Web3 Scams Using Best Practices

By Laxmikant Khanvilkar

Emergence of the global web3 market has added new dimension to digital technology with the help of blockchain, NFTs, cryptocurrencies and DeFi solutions. The market capitalization of the web3 currently pegged at around $27.6 billion, is expanding at fast pace. That’s exactly why it is also important to learn about web3 scams and the security risks of web3. 

According to the Global Web3 Security & AML Report 2022, the web3 industry registered 167 major attacks in 2022. The total loss incurred in the web3 attacks amounted to almost $3.6 billion, which is 47.4% higher than in 2021. The security incidents in 12 cross-chain bridge protocols alone resulted in losses worth $1.89 billion. 

The prominent scale of losses due to web3 attacks provides answers for Web3 vulnerability along with statistics. Apart from cross-chain bridge protocols, 20 different blockchain platforms also encountered major security breaches in 2022.

Every new technology attracts opportunities as well as challenges. Web3 startups were successful in acquiring over $7 billion as an investment in 2022 in the face of bearish market conditions. The influx of capital and development of new projects has enhanced the value of web3 alongside exposing its vulnerabilities.

The need to learn about web3 hack attacks emerges from the incidents faced by the market leaders such as Ethereum and BNB Chain. They reported major security incidents in 2022.

Users are investing in cryptocurrencies, DeFi solutions and NFTs to capitalize on the benefits of web3. However, limited awareness of web3 risks can make them vulnerable targets for scams and security breaches.

Remember, web3 transactions are irreversible, hence they often create difficulties in recovering assets lost to scams. As of January 2023, the total losses due to web3 vulnerability amounted to $29 million. The prominent categories of attacks include flash loan attacks and rug pull scams. The detailed overview of the state of security in web3 provides adequate reasons to learn about scams in web3.

Digital assets such as cryptocurrencies and NFTs in the web3 landscape have massive economic potential, thereby implying a promising future for web3. At the same time, hackers are moving towards web3 to hunt vulnerable targets in return for larger exploits.

The only way to ensure safety in web3 is to take responsibility for securing your assets and avoiding scams. A detailed understanding of popular web3 scams could help you identify the techniques employed by hackers to compromise web3 platforms.

Some of the common scams an investor can come across in web3 are: Celebrity Airdrops, Fake NFTs, Spoofing, Rug Pull Scams, Pump and Dump Scams and Phishing Scams.

Best practices for avoiding Web3 scams is undertaking comprehensive research. You must dive deeper into the details of every web3 project before placing your trust. Even the most popular web3 influencers should come under investigation when you come across random airdrops or rewards.

Always stay safe from malicious links and never share your private keys or seed phrase in any situation. Above everything else, you should practice patience before investing in web3 projects and avoid the greed to earn overnight fortunes. Another important practice in avoiding web3 hacks and scams is to remember the ‘too good to be true’ rule.

Web3 has been attracting investors with the assurance of benefits with decentralization and innovative economic potential of NFTs, cryptocurrencies and DeFi projects. However, the scams and hacks in web3 should not discourage investors from capitalizing on the opportunities available in web3.

Compliance with best practices for avoiding web3 scams, such as in-depth research on project details and review of documentation, can safeguard users against web3 risks.

10 days ago