Why Cybersecurity is Essential for Protecting Our Digital Future in Web3

My dear beloved reader,

I’m Yip, the founder of SystAIn3r - 1M Women & Non-Women in AI, Web3, Sustainability & Longevity and J3D.AI (Jedi) , with the grande vision to make peace more profitable than war.

Today, I delve into why mastering cybersecurity is crucial not just for protecting personal and corporate assets but for upholding and enhancing our democratic values in a world in which our assets are of digitally native nature.

I. Cyber Threats are of Severe Matter in Web3

If you're like me, buying into the vision of a future that will be based on the Internet of Value, where our lives are deeply intertwined with digital technologies built via the Web3 tech stack and crypto-currencies, cyber attacks can be particularly devastating, not just for individual victims, but for the broader cryptocurrency market. If you don't agree with me about the relevance of Web3, you may just consent to the mere fact that technology-native companies already today make up 80% of the top 10 largest market caps of the world, and that one plausible thesis of tomorrow can be that this number will not significantly decrease, but rather increase.

Bitcoin, a peer 2 peer technology platform with US$ 1.4 trn market cap, is ranked 10th, just following mainly America's tech leaders Apple, Microsoft, Meta, and you keep on naming them. My personal bet is that a decade from now, these names will be replaced by projects with cryptic names such as Ethereum, Polkadot, Cardano, Solana, etc., the pioneers building digital infrastructure for the Internet of Tomorrow.

In August 2024 alone, the crypto sector suffered staggering losses totaling US$313 million due to various cyber attacks. A staggering US$1.2 billion have been lost in attacks since the start of the year. Cyber attacks on cryptocurrency platforms can often have more severe consequences compared to traditional financial systems like banks for several reasons:

1. Irreversibility of Transactions

Unlike transactions processed by traditional banks, most cryptocurrency transactions are irreversible. Once a transaction is recorded on the blockchain, it cannot be reversed without the agreement of the majority of the network, which is usually not feasible for sufficiently decentralized networks. While decentralization is a core appeal of blockchain technology, offering increased resistance to censorship and central points of failure, it also means that there is often no central authority to intervene in the event of an attack. This also means that if funds are stolen, retrieving them is incredibly difficult if not impossible. In traditional finance, a bank can freeze accounts, reverse transactions, or take other immediate remedial actions in response to a security breach.

2. Lack of Regulation and Insurance in Web3

The cryptocurrency industry is still relatively unregulated compared to the traditional financial sector. Banks are typically insured and subject to stringent regulatory standards that protect consumers’ funds up to a certain amount. In contrast, cryptocurrency exchanges and wallets often do not have similar protective measures in place, leaving users with little to no recourse in the event of a hack.

3. Technological Complexity and Newness

The underlying technology of cryptocurrencies—blockchain—is complex and still relatively new. Many users and even some operators of cryptocurrency platforms may not fully understand the security implications or how to properly protect their systems and wallets. This lack of understanding and experience can lead to vulnerabilities that are less prevalent in the more mature systems used by traditional financial institutions.

4. High Value and Liquidity

Cryptocurrencies can be highly valuable, with some like Bitcoin reaching EUR 52k at the time of writing. They are also highly liquid, easily transferable across borders without the need for traditional banking processes. This combination of high value and ease of transfer makes them particularly attractive targets for cybercriminals. Since 2020, the North Korean government-linked Lazarus Group has exploited nearly US$2.4bn in crypto hacks.

5. Market Impact

The news of a hack can lead to significant market volatility. Cryptocurrency markets with a total market capitalization of just below US$ 2 trillion are known for their swift reactions to news and events. A significant hack can lead to a rapid and sharp decline in value, not just for the cryptocurrency involved in the breach but across the sector. This can exacerbate the financial impact of the hack and lead to broader market instability. With statistics indicating that 80% of hacked projects never recover their pre-attack valuation, the importance of proactive cybersecurity measures cannot be overstated. Each delay or oversight can lead to irreversible damage.

These incidents illustrate the vulnerabilities in our digital infrastructures and underscore the urgency of robust cybersecurity measures. At the minimum, of basic knowledge about security implications.

II: Cybersecurity as a Pillar of Digital Democracy

Cybersecurity transcends traditional asset protection; it safeguards the foundational systems that support our democratic institutions. Technologies like blockchain are heralded as tools of democratization, yet without stringent security measures, they can be exploited to undermine the very freedoms they aim to promote. A breach in a major cryptocurrency platform or a voting system can severely shake public confidence and erode public trust in these digital solutions.

Why does this matter for democracy? Reflect for a moment on the implications of a major cryptocurrency exchange hack or the exploitation of a vulnerability in a voting system.

In the digital age, the battleground for democratic values increasingly includes the financial and informational infrastructures that support free societies. Cryptocurrencies and blockchain technologies, often heralded as tools of financial democratization, are frequent targets:

• Financial Sabotage and Disruption: Cyberattacks on financial platforms undermine both the stability of democratizing technologies like blockchain and trust in digital institutions.
• Misinformation: Beyond theft, these attacks spread chaos and misinformation, eroding democratic discourse.

While participants in the Web3 World typically try to build systems, that abstract the need for "trust" between transacting actors away, it doesn't help when majority of potential new entrants are scared away because of the fear of these threats in a world they don't know yet. Such breaches can shake the confidence of users and citizens alike, leading to a breakdown in trust that is hard to repair.

Hence, consider this article an urgent invitation to take a stand against cyber threats!

III. Strategic Training for Real-World Application

In my view, adopting, adopting an integrative approach to cybersecurity in Web3 is essential. It combines three key design principles:

1. Stay Proactive: Constant vigilance and ongoing updates to our defenses are crucial in anticipating and mitigating potential threats.
2. Collaborate: No one can combat these threats alone. Sharing knowledge and resources is key to strengthening our collective defense capabilities.
3. Act Ethically: Use our skills responsibly to defend and protect without causing harm, ensuring our actions benefit the greater community.

When it comes to bringing these into action, we are launching our new initiative to upgrade Cybersecurity Awareness in the World of Web3 Builders.

Typically at SystAIn3r - 1M Women & Non-Women in AI, Web3, Sustainability & Longevity , our events are more than just meet-ups or regular trainings. They are a platform for building a community of current and future digital defenders, strategists, educators. This community is vital for fostering a collaborative environment where information and strategies are freely shared, enhancing the security of all members and furthermore, the ecosystem.

What is very important to me, is that we encourage those, who typically don't feel home in these domains, to embark into it, as we are purposely inviting underrepresented groups into our events. At this very moment, we have a significant lack of women in the ecosystem, so this is where we focus our recruiting efforts first!

First Pilot: 1-Day Web3 Cybersecurity Training in Berlin, September 28

Alongside our esteemed colleagues and world class cyber security experts at Security Research Labs , we are launching a pilot to weave in the above principles. Our 1-Day Cybersecurity Training goes beyond technical exercise; it’s designed to be an essential strategy session for anyone involved in digital technologies of the future.

Through live simulations and discussions with experts who have safeguarded hundreds of Web3 projects, our participants are in to gain practical skills and strategic insights, enabling them to think critically about cybersecurity and its broader implications.

People have asked me to specify the target audience for our interventions. I feel some resistance to doing so, as I am of strong conviction that this training is for everyone. However, sometimes it doesn't help to try to run against the door, so let me break it down for you:

• You, who wants to look at Blockchain from a strategic perspective. Our trainings are to understand it from C-Level perspective too as this helps you to take the driver's seat in your downstream decision-making.
• You, who loves to get hands-on and explore tools that they typically wouldn't even know about.
• You, who knows everything about web3 and potentially about cybersecurity, but just loves to vibe for a day with other peers, and build networks for life. Sweat bonds. And we make sure you'll sweat, going through the war game simulations.

What's my Call to Action?

Join us at our upcoming Cybersecurity Training in Berlin to transform concern into proactive defense. Help us all build antifragile ecosystems and economy of the future.

Your mission begins now. Are you ready?

Register Now and secure your spot in our upcoming in-person Web3 Cybersecurity Training in Berlin, September 28! Welcome home.

Curriculum and Application: https://cybersec.systain3r.com

With much love,

Yip