🦊 Does Web3 Improve Data Security - or doesn’t it?

Dear Happy Foxes 😃🦊,

We often get asked if personal data is really more secure in Web3 than in Web2 because everything is transparent on the blockchain.

Before we dive into the topic of data security in Web3, let’s get some terms right:

Data security and data privacy are two different things.

We want to weigh the pros and cons of data security in Web3 for you. Let's list three of each.

✅ In theory, the users of Web3 are the sole controllers of their private data. They have the power to decide when and with whom they want to share specific information. However, this only works if individuals take full responsibility for their digitally stored data, which can be burdensome, particularly today. We are optimistic that Web3 startups will soon find a solution to this problem.

✅ Lower risk for cyber attacks: Storing data on Web3 is a wise choice as it provides enhanced protection against ransomware attacks. The decentralized nature of blockchains makes it practically impossible for hackers to gain control of your data, ensuring its safety and security.

✅ Data stored on the blockchain cannot be deleted, preventing hackers from blackmailing companies for access to their data.

🚫 Smart Contract Vulnerability: Smart contracts are the codes that “run Web3” and must be executed with utmost precision. Any mistake in the code could potentially expose vulnerabilities and pave the way for malicious attacks by hackers. It is crucial to ensure that smart contracts are flawlessly written and rigorously tested to safeguard the integrity of the system.

🚫 Delayed security updates: In Web3, releasing security patches is challenging as approval from the decentralized network is required for implementation.

🚫 It's possible to reverse-engineer anonymous data on a blockchain, so combining data from multiple blockchains might reveal unintended information.

But wait…did you just read that data is more secure because nobody can read it, and at the same time, transparent and prone to reverse-engineering?

Yes - because both are true, depending on the application you are dealing with. That is why it’s essential to understand what data is stored where - by the way, not only in Web3 but also in Web2.

Our take? Web3 improves data security a lot IF done right.

Are you now wondering about the pros and cons of Web3 regarding data privacy? Watch out for next week’s newsletter - and let us know your questions and thoughts by replying to this email.

Cheers

Sui Fröhlich & Ursula Volpe
Co-Founders Fox and Happy Blocks

^{Disclaimer: None of this is financial advice. Always do your own research.}