Cybercrime can take many different forms, including ransomware attacks, identity theft, data theft, and phishing campaigns. Global cybercrime losses are projected to reach $10.5 trillion annually by 2025, according to cybersecurity research firm Cybersecurity Ventures.

The first decentralized blockchain network, Bitcoin, was launched with its own cryptocurrency in January 2009. This technology includes security features such as cryptography, centralization and consensus. Ronghui Gu, a co-founder of blockchain security company CertiK, said blockchain technology is “intrinsically a security technology” and that traditional industries such as healthcare and finance that “heavily rely on data integrity” can have a higher level of security through its use.

“For example, patient records stored on a blockchain can reduce the risks of data breaches and unauthorized access to sensitive information while giving patients more control over their data and greater authority over who it is shared with and when,” Gu said.

Some companies are already experimenting with storing and managing medical records using blockchain. One company even issued a COVID-19 health certificate on the blockchain.

The centralized nature of standard data storage systems can make them attractive targets for cyber attackers, Gu said. Additionally, many existing systems lack adequate mechanisms for individuals to verify where and how their data is used. He believes Blockchain and Web3 technologies address some of these issues by decentralizing data storage and reducing the risks of centralized points of failure and unauthorized access.

“Blockchain is designed to eliminate a single point of failure, thanks to the distributed ledger technology on which it is built. This makes it more resistant to traditional cyber attacks such as data corruption and network infiltration,” Gu said.

“Unlike centralized systems, blockchains distribute data across a network of computers, making it incredibly difficult for attackers to take over the entire system.”

CertiK’s annual “Hack3d: The Web3 Security Report” report for 2023 revealed that more than $1.8 billion in digital assets were lost in 751 Web3 security incidents in 2023.

Gu said that blockchain technology is not completely immune to cyber attacks, but its centralized structure provides more robust security. To alter a distributed ledger, a hacker would need to control more than half of all machines, and “once data is entered, it becomes nearly impossible to change.”

“Every transaction is secured with strong cryptography so only those with the correct keys can make transactions on behalf of an address,” he added.

Data from online data aggregation platform Statista shows that investment scams caused the highest losses in the United States last year. Business email compromise comes in second, followed by fraudulent tech support correspondence.

Each of these attacks may involve requests to send money to scammers and may result in the disclosure of sensitive financial and personnel information. Gu believes that the use of smart contracts can help reduce the success rate of these common cyber attacks. A smart contract is a transaction protocol designed to automatically execute completed transactions based on the terms of an agreement.