Are you ready for the metaverse?
Meta – the firm formerly known as Facebook – Microsoft, Nvidia and other Fortune 500 technology companies are investing billions of dollars in this revolutionary technology.
And they are not the only early adopters: Athletics apparel giant Nike has already sold $10 million worth of metaverse sneakers and real estate investors are projected to spend $1 billion on metaverse real estate transactions this year.
Clearly, this is the start of something big.
However, while the metaverse presents seemingly endless possibilities, it’s also rife with cyber criminals ready to scam users. Thus, cybersecurity firms will play an important role in preventing fraud, protecting users’ privacy, and ensuring the metaverse is a space where individuals and businesses can consume and operate safely.
In this article, we will explore 5 cybersecurity risks that metaverse users will have to face and deal with.
- Identity Theft
The first serious cybersecurity risk of the metaverse is identity theft.
This is already a big problem on the internet, as thousands of individuals are victim of identity theft each year. Indeed, not only is it very easy for criminals to create fake profiles and scam people out of their money, but data hacks are commonplace, and private information, such as credit card information and cryptocurrency wallet passwords, are bought and sold on the dark Web every single day.
Unfortunately, this problem is far from being under control. In fact, Aite Group expects that the identity theft market will reach $623 billion in 2023. This is a lucrative industry, and identity theft could increase exponentially in the metaverse, as digital identities will be easy to create, duplicate, and eventually steal.
Thus, analysts believe that many metaverse users will be victims of account takeovers, phishing attacks, and fake services created to hijack private data.
Cybersecurity firms will have to be diligent about verifying digital footprints to identity fraud in real time and trace criminals. In parallel, metaverse users will have to be very careful about who they share their personal information with. In any case, users will have to proceed with extreme caution.
- NFT Scams
Non-Fungible Tokens, or NFTs, are defined as “non-interchangeable units of data stored on a blockchain” that can be exchanged, traded, and sold. The typical use cases involve digital files such as photos, audio and video files, that are incorporated in a blockchain for traceability.
Essentially, NFTs ensure that creators are paid for their work and protected against counterfeits and other forms of intellectual property theft.
At its core, an NFT is a new form of intellectual property.
If you thought NFTs were a temporary fad, think again.
Believe it or not, total NFT sales reached $17.7 billion in 2021, up from $82.5 million in 2020. What’s more, NFT profits generated from the buying and reselling totaled $5.4 billion in 2021, compared to $12 million in 2020, a whopping a 44,900% increase. Pak’s ‘The Merge’, the most expensive NFT ever sold, was sold for a mind-boggling $91.8 million.
As with most activities involving decentralized cryptocurrencies, the NFT space is still largely unregulated. Thus, it is rife with fraud, scams, and Ponzi schemes. In most cases, NFT scams involve some form of social engineering or phishing attacks. Given that the metaverse will be a place where human interaction is fully immersive, these types of scams will be commonplace.
How can cybersecurity firms combat these scams?
They will have to create specialized “scam detection” services – similar to what independent “crypto sleuths” are doing – that audit projects and call out criminals before they successfully con investors.
- Malicious Smart Contracts
Blockchain technology has given rise to a new form of formalizing agreements: smart contracts.
A smart contract is an agreement between two parties that is coded to self-execute once specific conditions are met. For example, a business and a client can sign a smart contract whereby payment is released upon delivery of goods.
A smart contract enables anyone to create a self-executing settlement without
requiring a third-party to oversee the process.
As blockchain technology matures, it becomes easier to write smart contracts. It is reasonable to assume that within a few years, the technology will enable almost everyone to draft and execute them.
However, since the metaverse is an environment where reality is by essence virtual, new users will find it difficult to separate legitimate operations and scams, especially when projects are purposely made too complex for the average person to decipher.
The risk is that cyber criminals will either take advantage of poorly written contracts or lure unsophisticated investors into well-crafted scams. Sophisticated fraudsters will exploit the public’s ignorance – that is, their inability to read the smart contract’s code – and develop schemes involving smart contracts that automatically release funds into their wallets once money is sent to a specific address.
Cybersecurity firms will face the difficult task of auditing projects, verifying the “trustworthiness” of smart contracts, and trying to trace and recover stolen funds across borders and blockchains.
- Vulnerable AR/VR Devices
In February 2022, Rutgers University researchers revealed they had discovered security vulnerabilities in VR headsets, the very devices that enable users to enter the metaverse.
Their research shows that criminals could steal credit card data, passwords, and other sensitive information by recording speech-associated facial dynamics with the VR headsets’ built-in motion sensors.
Unfortunately, VR headsets are vulnerable to sophisticated scamming techniques.
Unfortunately, all the popular brands’ headsets present security risks. Once again, cybersecurity firms will have to implement features that prevent criminals from recording users without their consent, or accessing their private information.
- Blockchain scams
Earlier this year, the China Banking and Insurance Regulatory Commission warned that cyber criminals are already involved in a variety of metaverse scams. For example, they are “absorbing capital” from illegal fundraisers and rackets, which are marketed to the public as legitimate investment projects and blockchain games.
Many scammers impersonate politicians, businesspeople and celebrities in order to
scam unsuspecting followers. The metaverse will have to deal with these problems as well.
The metaverse is based on avatars, so it could be relatively easy for scammers to impersonate public figures to dupe gullible users. This type of scamming is common in the cryptocurrency sphere, where “giveaways” and other schemes are promoted via fake celebrity profiles.
Cybersecurity firms involved in the metaverse will need to investigate every project to ensure the person behind the profile is indeed who they claim to be.
The Bottom Line
The metaverse will require more data collection and storage than ever before. Consequently, the risk of theft, fraud, and scams increases significantly. Further, since it the metaverse will be a decentralized environment, it may be difficult to track stolen assets, much less recover them.
Clearly, these facts pose major risks for users.
Obviously, the basic components of internet cybersecurity, such as VPNs, proxies, and antimalware software, will remain crucial to ensure basic safety.
However, this will be wholly insufficient to address the myriad of challenges.
Specialized cybersecurity firms will be in great demand, and every organization willing to operate in the metaverse will need to develop their own internal processes to help users clearly differentiate their legitimate operations from criminal activity.
Michael Megarit is a partner with Cebron Group.