Updated on January 18, 2023 9:45 AM
The year 2022 has been difficult for Web3, particularly in the crypto space. While cryptocurrencies experienced a significant drop, new projects and protocols were introduced on the other.
One of the most significant advancements in the crypto business was the Ethereum update, which made the blockchain more scalable, safe, and long-lasting. But that wasn't the end of it. The Central Bank Digital Currency (CBDC) and a new crypto tax policy were also introduced by the government in India.
Other areas saw movement in addition to the Web3 space. The rise in online fraud as attackers' strategies become more sophisticated prompted the increased demand for cybersecurity.
The government has launched some notable efforts in the fintech arena, including UPI 123 Pay and the introduction of 75 Digital Banking Units (DBUs) in 75 districts to address the country's under-penetration of banking and financial services.
With 2022 behind us, the major issue now is: how will some of these industries fare in 2023?
As the revolutionary influence of this technology becomes clearer, governments will be more likely (and some would argue, required) to step in to oversee and regulate the impact on economies, society, and the environment.
In the United States, states such as Wyoming have utilized their legislative abilities to design and adopt their own legislation in order to promote themselves as "Web3-friendly" zones.
The concept is that enterprises engaging in Web3 activities will receive preferential status and specific tax considerations in exchange for accepting regulation and oversight.
Colorado was also the first state to accept cryptocurrencies as payment for taxes and government fees this year.
Outside of the United States, Dubai has demonstrated a strong desire to become a Web3 and cryptocurrency-friendly society.
The emirate has developed economic programs to entice companies involved in Web3 work to establish operations in its territory, as well as promoting itself as a natural home for innovation in the fields of artificial intelligence, cloud computing, and the metaverse - all of which are closely related to new developments in Web3.
Other countries are anticipated to promote themselves as Web3-friendly by 2023, often through the usage of central banks' digital currencies such as India's upcoming e-rupee and China's Digital Yuan.
Over the last decade or two, cybersecurity challenges have been increasingly apparent, particularly in regard to the developing Web3 economy.
This is due to the fact that bad actors' ploys have become increasingly sophisticated over time, resulting in a string of scandals that have either resulted in severe regulatory concerns or a loss of consumer confidence in this field.
Despite this, it is anticipated that the Web3 sector will be worth $6 trillion by the end of 2023, indicating that the space is prepared to see an increase in investor interest even if the industry (particularly the DeFi market) has been subjected to multiple hacks and rug pulls.
With such large sums of money at stake, it stands to reason that Web3's cybersecurity quandary will continue indefinitely until specialists are able to implement improved security measures across the board.
In this context, the industry needs to revise its present security practices in order to provide better end-user privacy while also improving protocol safety.
As things stand, the amount of financial crime occurring on-chain is at an all-time high; however, because blockchains are designed to be immutable, experts like Torres are confident that by 2023, a growing number of crypto firms will continue to develop their own on-chain analytics and monitoring systems.
On-chain monitoring is the process of collecting data about a given blockchain by analyzing its transaction history, hash rates, and other details. It contributes to the development of a powerful tool that allows anyone to acquire real-time insights into the blockchain's security-related actions.
Furthermore, Torres believes that in the following year, problems caused by improper code logic will grow more pressing, necessitating the attention of the entire sector. She went on to say:
"Part of that is due to lack of knowledge since a lot of people are constructing new systems with less capable individuals who don't really have a computer science background. Because of these factors, I believe we will continue to witness the exploitation of faulty reasoning or incorrect coding."
With the increase in digital attacks, it is becoming increasingly difficult for cybersecurity specialists to respond to the different situations occurring throughout the world in real time. As a result, an increasing number of industry experts are already using artificial intelligence (AI) technologies or have investigated incorporating them into their existing security frameworks.
Technically, machine learning algorithms — a fundamental component of AI technology — have the capacity to examine/analyze massive amounts of data traveling across numerous networks at a rate that humans simply cannot match.
To date, studies have shown that projects that use AI data breach systems save approximately $3 million compared to those that do not.
With Web3-based digital technologies gaining traction by the day, it is safe to conclude that it will be critical for the crypto business to work toward establishing a cybersecurity culture by 2023.
Furthermore, it is no longer sufficient for employers/employees to view cybersecurity solely as an IT issue. Instead, everyone must have a fundamental understanding of the hazards that are prevalent in the market today, as well as the actions that must be taken to avoid them.
What exactly is Web3 technology?
The distinction between Web 2.0 and 3.0 is that Web 3.0 is more focused on the use of technologies such as machine learning and AI to give appropriate material for each user rather than just the content provided by other end users.
Is Web3 synonymous with cryptocurrency?
Web3 is the moniker given by some technologists to the concept of a new type of internet service developed utilizing decentralized blockchains — the shared ledger systems used by cryptocurrencies such as Bitcoin and Ether.
What is the difference between Web3 and crypto?
Crypto is not the same as web3, but rather a subcategory of web3 technologies that relate to any blockchain-based technology. Web3 is an abbreviation for web 3.0, which is a suggested progression of the "web 2.0" era.