Opinion: Web3 gaming continues to face the daunting task of achieving foolproof security against fraud.

Disclaimer: The author’s opinions expressed in this article are solely their own and do not represent the views and opinions of crypto.news’ editorial team.

One of the biggest concerns and criticisms in the world of crypto projects, especially in blockchain-based games, is the constant threat of scams, fraud, and cyberattacks. This year, the security focus in the industry has been reinstated due to several scams and vulnerability exploits in web3 gaming projects. According to a recent report from blockchain security platform CertiK, a popular web3 game allegedly pulled an exit scam worth $1.6 million in user funds. In fact, a recent survey of active web3 gamers found that 41% of gamers are concerned about potential scams and fraudulent activities in the sector.

To address these rising concerns, more investment is being made in blockchain security solutions. In October alone, blockchain gaming startups raised $103 million, with the majority of funds going to security-focused projects like Blockaid, a startup specializing in advanced crypto security. Moving forward, security will be the main driver for user adoption and funding in the web3 gaming space as the push towards zero-fraud becomes more prominent. But why is security still a stumbling block in the web3 arena?

The main risks in the blockchain gaming sector come in two forms: direct scams, where money is stolen, and hidden fraud, where trust is built before causing a loss. Hidden risks are often more subtle and insidious, appearing in mechanisms that tilt the odds against the user. Developers often use discreet algorithms in the backend that manipulate game outcomes, making players believe they are simply experiencing a string of bad luck. These algorithms allow malicious developers to manipulate win-loss ratios and keep users engaged while decreasing their chances of success. Such deceptive practices undermine user trust and threaten the integrity of the entire ecosystem.

However, these issues can be addressed with blockchain technology. Blockchain introduces two critical factors that significantly reduce the likelihood of fraud: the reliability of smart contract execution and the complete transparency of all actions and transactions. Many of these security concerns can be minimized by effectively leveraging smart contracts in web3 gaming projects.

Smart contracts, once deployed, are unchangeable, ensuring that game rules cannot be altered to favor specific outcomes or parties. This immutability provides certainty and fairness that was previously unattainable. Additionally, smart contracts, distributed across multiple nodes in the blockchain, reduce the risk of centralized control and manipulation. At Playnance, for example, all game rules are secured with a smart contract for both consumers and partners.

However, smart contracts are not foolproof. If not deployed correctly, they can lead to major vulnerabilities. Deviations from the ERC20 standard, for instance, can result in non-functional methods that trap funds and block contracts. Contracts reliant on timestamps can also be manipulated by miners altering timestamps, affecting contract outcomes.

Web3 gaming projects must strike a balance between functionality and secure deployment to mitigate these risks. While functionality is crucial, it should not compromise security. Blockchain networks like Ethereum and EOS enable robust smart contracts, but developers must be cautious not to introduce critical flaws. Developers also need to choose programming languages sensibly. Using languages like C++ or JavaScript allows for complex contracts but poses significant security risks. Simpler languages like Scilla, used for Zilliqa smart contracts, help reduce the likelihood of programming errors.

Most importantly, the role of independent and trustworthy web3 auditing firms is crucial. These firms thoroughly examine smart contracts to validate their security and reliability. An inspection by a reputable web3 auditor serves as a seal of trustworthiness, indicating that the game operates as intended, without any hidden loopholes or mechanisms that could be exploited for fraudulent purposes.

To enhance security, blockchain gaming projects should continuously explore innovative web3 solutions to update and refresh their security protocols. Security should not be treated as a one-time activity but as an ongoing business process that integrates new policies, strategies, and solutions to increase platform resilience.

Non-custodial wallets offer significant enhancements. Unlike traditional gaming platforms, where funds are deposited, these wallets allow players to retain control over their funds and approve transactions only when necessary, minimizing the risk of platform-based fraud.

Modern web3 sign-up solutions like Web3Auth and fiat bridges simplify the process of creating and funding crypto wallets, enhancing adoption and security. They enable quick, smooth transactions while securing player funds and are already in use in several projects. The combination of transaction transparency and innovative web3 tools presents a strong barrier against fraud, ensuring that blockchain gaming is not only immersive and engaging but also secure and trustworthy.

Achieving zero-fraud is an essential and ambitious goal for blockchain gaming, especially in dynamic sectors. It can be achieved through suitable business models and security practices, particularly in peer-to-peer gaming models. In environments where players compete against each other rather than the platform, the incentive for developers to incorporate fraudulent mechanics is significantly reduced, if not eliminated. Shifting towards player-versus-player formats supported by transparent, secure blockchain technology can promise a future where fairness is not only an aspiration but an inherent feature of the gaming experience.

Overall, as blockchain gaming continues to evolve, it demonstrates the possibilities of a secure and fair digital gaming world, where the risks of fraud are not just mitigated but rendered obsolete by the very architecture of the technology. The vision for web3 gaming projects should be to free users from the shadow of fraud and deception by ensuring transparent development, robust security measures, and embracing security monitoring and audits.