The possibilities of Web3 are becoming increasingly apparent. This newest iteration of the internet will feature a strong emphasis on decentralized applications, heavy use of machine learning and artificial intelligence and extensive use of blockchain-based technologies. Additionally, the metaverse provides infrastructure that allows consumers to interact socially and in business-related pursuits, make investments and more. Whether excited about the potential widespread use of the metaverse or relieved at the prospect of inexpensive cross-border bitcoin transactions, businesses and consumers alike are eagerly anticipating these advancements in technology.
Criminals are, too.
Companies entering this new ground are thus tasked with modernizing the technological infrastructure they have in place while also keeping transactions and data safe. While consumers say they want security, they tend to view newer authentication methods with a jaundiced eye, fearing difficulty with logging in and questioning whether these methods will really keep their data. PYMNTS’ research found that fewer than 10% of consumers currently use biometric authentication methods, despite their very strong security. Erring toward the familiar, consumers — especially older generations — tend to prefer username and password logins, with almost one-third of consumers saying this is their preferred login method when using a browser and more than 23% saying the same when using a mobile app.
This month’s “Digital Fraud Tracker®,” a PYMNTS and DataVisor collaboration, examines how businesses can keep both merchants and consumers safe while moving to the metaverse and why Web3 is already part of our lives.
Around the Digital Fraud Space
Criminals looking for new fertile ground are likely to consider the metaverse, which is set to be valued at $13 trillion by 2030, according to a recent Citibank study. More than 99% of the projected illegal activity will be related to crypto asset theft. There is also wide criminal activity reported impacting non-fungible tokens (NFTs), with scams such as fake giveaways, browser wallet attacks and social engineering creating hazards for those involved. 
Other crimes of concern include general scams such as fake airdrops and phishing links. Citibank’s report suggests screening metaverse connections and wallets for criminal ties before conducting any sort of transaction to prevent becoming the next target.
The segment of users most frequently utilizing services that make crypto transactions less traceable are cybercriminals, according to a new report by analyst firm Chainalysis. These criminals do this by using mixers, also called tumblers, a tool that collects cryptocurrency from disparate users and then mixes them. After extracting a fee for its services, the mixer allows these users to withdraw the amount they deposited. The greatest amounts of currency deposited into mixers came from “illicit addresses,” which accounted for 23% of funds processed by mixers in 2022. Not everyone using mixers is a criminal, however, as some mixer users may be trying to hide their transactions from oppressive governments.
For more on these and other stories, visit the Tracker’s News and Trends section.
BNY Mellon on Moving to the Metaverse Safely
Web3 is already here — but so are some of the security threats inherent to a metaverse-based business environment. Carl Slabicki, co-head of global payments at BNY Mellon, shares with us the best practices for ensuring a safer technology infrastructure as we move forward to an increasingly virtual world.
To learn more about preventing digital fraud in the metaverse, read the Tracker’s Feature Story.
PYMNTS Intelligence: Keeping Consumers Safe in Web3
As ubiquitous as the internet may be, there are new and exciting virtual realities to consider: The metaverse is on its way, and a recent poll indicates that 4 out of 5 consumers are looking forward to experiencing art, culture, fashion, movies, concerts and games in the virtual universe. These technologies show promise from a business perspective, too: 72% of businesses with an international presence intend to expand into new markets, fueled by investments in digital technologies.
Moreover, 56% of executives say their business has a Web3 strategy, and 47% say they expect Web3 technologies to replace the current internet infrastructure within the next one to five years. Along with these benefits come pitfalls, especially security and fraud concerns regarding the metaverse and one of Web3’s cornerstones: cryptocurrency.
To learn more about keeping consumers and their assets safe in the metaverse, read the Tracker’s PYMNTS Intelligence.
About the Tracker
The “Digital Fraud Tracker,” a collaboration with DataVisor, examines the latest trends and developments shaping the digital fraud space and the factors impacting data security for both merchants and consumers.