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Blockchain Can Help Eliminate Cybercrime Threats — TradingView News
Cybercrime-related losses reach new highs every year, and some experts believe that while blockchain technology may not be the silver bullet to stop it, mainstream adoption could certainly help.
Cybercrime can take many forms, including ransomware attacks, identity fraud, data theft and phishing campaigns. Losses due to cybercrime worldwide are estimated to reach $10.5 trillion per year by 2025, according to cybersecurity research firm Cybersecurity Ventures.
The first decentralized blockchain, Bitcoin BitcoinUSD, was launched in January 2009 along with the associated cryptocurrency. Security features such as encryption, decentralization, and consensus are built into the technology.
Speaking to Cointelegraph, Ronghui Gu, co-founder of blockchain security firm CertiK, said that blockchain technology is “at its core, a security technology” and that “major industries that rely heavily on data integrity” , such as healthcare and finance, could have a higher level of security through its use.
“For example, patient data stored on a blockchain could reduce the risks of data breaches and unauthorized access to sensitive information, while giving patients greater control over their data and when and with whom it is shared.” , he has declared.
Some companies are already experimenting with storing and managing medical records using blockchain. One company even released a COVID-19 medical certificate on the blockchain.
Gu said the centralized nature of standard data storage systems could make them attractive targets for cyber attackers. Furthermore, many current systems do not have sufficient mechanisms for people to verify where and how their data is being used.
He believes blockchain and Web3 technologies solve many of these problems by decentralizing data storage and reducing the risk of centralized points of failure and unauthorized access.
“The distributed ledger technology it is built on is designed to eliminate single points of failure, making it more resistant to traditional cyber attacks such as data tampering and network penetration,” Gu said.
“Unlike centralized systems, blockchains distribute data across a network of computers, making it incredibly difficult for attackers to gain control of the entire system.”
Blockchain offers above-average security
CertiK’s annual “Hack3d: The Web3 Security Report” for 2023 found that more than $1.8 billion in digital assets were lost due to 751 Web3 security incidents in 2023.
Gu said blockchain technology is not immune to cyberattacks, but that its decentralized nature provides stronger security. To modify a distributed ledger, a hacker would need control of more than half of all machines, and “once the data is entered, it becomes almost impossible to modify it.”
“Every transaction is protected by powerful encryption, ensuring that only those with the correct keys can act on behalf of an address,” he added.
Data from online data collection platform Statista shows that investment scams recorded the highest losses in the United States last year. Business email compromise was second, followed by fraudulent tech support correspondence.
Each of these types of attacks can result in a request to send funds to scammers and result in monetary losses, as well as the exposure of sensitive financial and personal information.
Gu believes that the use of smart contracts could help reduce the success rates of these common cyber attacks.
A smart contract is a transaction protocol intended to automatically perform actions bound by the terms of the agreement.
“Smart contracts can ensure that transactions are executed if, and only if, certain conditions are met, reducing the risk of fraud in the financial sector and automating many laborious compliance tasks,” Gu said.
Blockchain isn’t the silver bullet for stopping cybercrime, but it could still help
Gu believes that “complete elimination of all cybercrime is not realistically achievable” because cybersecurity is an ever-evolving field. As new technologies emerge, new vulnerabilities and attack vectors also emerge.
“A significant amount of cybercrime exploits human errors, such as weak passwords, phishing scams or social engineering attacks. While education can reduce these risks, it is unrealistic to expect every user to be foolproof,” she said.
“There is also a socioeconomic dimension to cybercrime. As long as there are incentives, financial or otherwise, individuals or groups will engage in criminal activity.”
According to data from Statista, such incentives, especially funds stolen from victims, will reach dizzying levels of more than $13 trillion by 2028.
Gu believes the goal should not necessarily be to eliminate all cybercrime, but rather to minimize it and mitigate its impacts through resilient infrastructure and informed users.
“This approach preserves the freedom and benefits of decentralized technologies, while protecting against inherent risks,” he said.
“Achieving a state where cybercrime is completely eradicated would likely require extreme measures that could infringe on personal freedoms and privacy in line with the values for which blockchain was created,” Gu added.
Speaking to Cointelegraph, Johann Polecsak, co-founder and chief technology officer of hybrid blockchain platform QANplatform, said that while “blockchain alone is not the silver bullet against all types of cyberattacks,” it could help increase security in specific fields.
“If implemented correctly, it can effectively narrow the point of failure to key management issues, which, in turn, can be effectively mitigated using hardware-based signature tools,” he said.
“However, to build a truly future-proof system, it is undoubtedly important to choose a blockchain designed to resist quantum cyberattacks.”
Quantum computing has long been feared as a possible game changer for the cryptocurrency industry. A computer capable of breaking blockchain encryption could lead to large-scale theft of user funds.
Eskil Tsu, co-founder of decentralized security and data services network GoPlus, told Cointelegraph that he believes “blockchain is the only thing that can help” reduce cybercrime.
“Blockchain’s inherent properties of decentralization, transparency and immutability can significantly mitigate risks and reduce the surface area for online attacks,” he said.
“Leveraging these fundamentals by offering robust security solutions not only protects against current threats but also anticipates future vulnerabilities.”
Blockchain technology is a possible solution to AI-based cyber attacks
Fraser Edwards, co-founder and CEO of decentralized data infrastructure provider Cheqd, believes there are many opportunities for blockchain technology to prevent cyber attacks, particularly phishing scams and identity theft.
According to a 2024 report from security vendor Hornetsecurity, phishing continues to be the most common email attack method, accounting for 43.3% of all email threats.
“Decentralized identity and credentials, often using blockchain behind the scenes, will have a huge impact on reducing cyberattacks,” Edwards said.
“A huge percentage of cyberattacks happen through phishing or social engineering, where people are impersonated or their security details are taken.”
Edwards said blockchain technology could also be the answer to emerging scams and cyber threats, such as those using artificial intelligence.
Concerns about AI-generated content have increased exponentially in recent years. The World Economic Forum even highlighted all the possible negative outcomes of artificial intelligence technologies in the 2024 edition of its “Global Risks Report”.
Deepfakes have been flagged as being of particular concern. AI-powered video technology can create computer-generated images and voices that are often indistinguishable from reality.
A recent deepfake scam saw a Hong Kong company defrauded of $25 million when scammers posed as senior executives in an online video meeting. Hong Kong police said it was one of the first cases of its kind encountered.
According to data from SumSub, deepfakes increased tenfold across all industries globally from 2022 to 2023.
Edwards said it is now possible to generate fake passports or driving licenses, which can be used to cheat Know Your Customer (KYC) processes. He also said that once you know someone’s account details, it’s usually easy to impersonate them through their accounts or apps.
KYC checks are the mandatory identification and identity verification process when opening an online account with a cryptocurrency exchange.
Edwards argued that a possible solution to curb these types of cybercrime could be a decentralized identifier (DID), a globally unique identifier such as a URL whose address is unique, highly available and cryptographically verifiable.
“The DID and Credentials somewhat automatically implement 2FA with authenticating accounts not only using passwords but requiring the correct signature from the wallet or device where the credentials are stored,” he said.
“The DID and credentials can also prevent document images from being generated by AI, as they would not be signed by the right issuer and would therefore be easily detected as fraud. Likewise, content credentials can prevent the generated videos from being used,” Edwards added.