Challenges Facing Web3 Cybersecurity

Oct 23, 2023  •  Written by Ocular Team

In the dynamic world of cryptocurrencies, losses from cyber attacks have skyrocketed. It has surged past $1 billion in 2023. Surprisingly, when compared to the traditional IT security sector, the top 5 market cap of security-listed tokens in the crypto space is only around $150 million while the traditional top 5 IT security has a total market value of $350B. This stark contrast shows that the web3 cybersecurity track is still in its early stage of development. But why is this the case? To understand, let's delve into the history of the security industry.

The inception of the first known program virus, Creeper, in 1971 marked the beginning of a cybersecurity cat-and-mouse game. Although Creeper caused no significant damage, Reaper was developed in 1973 to eliminate it, ending with Reaper’s victory. This evolution of viruses then began causing harm to computers. Subsequent developments, such as the infamous Brain virus in 1986, then led to the establishment of legacy antivirus software companies like McAfee, G Data, and Avira. Over time, these antivirus products began to be widely adopted by corporations to ensure the safety of corporations in the evolving landscape of cyber threats. For this market, web3 project is hard to compete with here, because most corporations still leave their system on servers and web2 world.

While traditional web2 services operated from central servers, web3 requires more robust security solutions, particularly for blockchain and smart contracts. Currently, the majority of U.S. C-end customers heavily rely on free antivirus services, with Microsoft Defender being the choice for nearly 40% of users. In this case, web3 security services could seamlessly integrate into popular wallet services like MetaMask or through RPC providers, mirroring the built-in feature approach adopted by Microsoft.

Contrastingly, the C-end market remains profitable for startups, with 32% of U.S. users opting to pay for antivirus software. Norton and McAfee dominate this space, holding significant market shares through bundling sales with hardware and OS systems. Applying a similar strategy, web3 C-end security providers could bundle their services with hardware devices like Solana’s Saga phone or cold wallet providers. Meanwhile, major security tools will be provided by hot wallets or RPC nodes.

On the institutional front, existing large custodians have the potential to play a key role by developing or integrating security services within their product suite. This approach could offer an all-encompassing security service to large institutional customers.

The journey toward a secure web3 landscape involves not only technological advancements but also strategic partnerships, market awareness, and institutional commitment. Ocular believes in the expansion of the web3 security market as the web3 landscape becomes more popular. However, the current willingness of users to pay for such services along with an effective pricing strategy still remain unclear. We are looking forward to more innovative ideas ans staying connected with the builders in the space.

Disclaimer: This information is for educational purposes only and should not be taken as investment advice. Always do your own research and seek professional advice before making any investment decisions.