Digital assets are an emerging technology, and cybersecurity risk management teams must prepare accordingly. Every company should ask what digital assets and Web3 mean in the context of its own operations.
What Do Digital Assets and Web3 Mean to Your Organization?
Modern technology has sparked a wave of innovation, including the development of interoperable technology systems, increased automation and autonomy, cyber-physical systems, and convergence between biological and technological domains. Decentralized blockchain technology is emerging as the foundational layer upon which data-rich, high-value systems are built. Decentralized digital assets and Web3 are critical use cases of this technology that present both potential opportunities and threats to organizations. To help maximize benefits and mitigate risks, organizations should adopt digital assets thoughtfully and securely. Stroz Friedberg can help clients make informed decisions regarding digital asset and Web3 adoption.
What Are Digital Assets?
Before addressing the security implications of digital asset and Web3 adoption, it is important to clarify what we mean by “digital assets.” Regardless of type, digital assets should be treated as resources that can enhance an organization’s value proposition and help maintain or grow its competitive advantage. They are akin to any other corporate resource, such as office equipment or software licenses.
- Digital Token: An asset with an issuer, backed by digital utility and intended for capital creation and innovation. Examples include assets that provide specific functionality or utility within a digital ecosystem (e.g., Polkadot, Hedera).
- Digital Security: An asset with an issuer, backed by a traditional security or commodity (e.g., equity, debt, gold, property). These are tokenized versions of conventional financial instruments.
- Digital Currency: An asset with an issuer, backed by a fiat currency (e.g., USD) and focused on facilitating digital commerce. These include stablecoins, which are pegged to traditional currencies.
- Digital Commodity: An asset without an issuer, backed by computational resources and designed for capital preservation and appreciation (e.g., Bitcoin, Litecoin).
What Is Web3?
Web3 represents the ongoing evolution of the internet toward a permissionless, decentralized model with openly verifiable data provenance. It also enables data sovereignty and incentive-aligned networks, allowing future mass adopters to interact with novel blockchain-based architectures without being fully aware of the underlying technology.
For end users, Web3 experiences will be seamless: decentralized applications (dapps) may look and feel much like current web applications, but they are powered by blockchain infrastructure and reliant on digital assets. This shift will unlock profound new use cases integrating with both personal and professional lives in more immersive ways.
In Web3, users own their data, and their participation in the ecosystem is incentivized—often through the distribution of digital assets. This design can pave the way for entirely new digital economies driven by vast numbers of micro-transactions, each representing a direct exchange of value. Because the migration from Web2 to Web3 has already begun, organizations should start understanding the relevant technology and security implications now.
Is Your Business, Technology, and Security Strategy Future-Proofed?
Every company should ask what digital assets and Web3 mean in the context of its own operations. What opportunities exist for creating or preserving value? How can you position yourself to maintain or enhance your competitive edge?
Cybersecurity risk management leaders play a pivotal role in shaping strategic business and technology decisions. Security considerations should be integral from the start. Adoption strategies must be deliberate and should include, among other things, ongoing cybersecurity activities (e.g., testing, code review, monitoring).
No matter where your organization is on its adoption journey—whether at the ideation stage, planning phase, or executing your first Web3 pilot—Cybersecurity risk management leaders should consider a full suite of digital asset and Web3-focused services. These offerings include strategic advice and guidance, implementation planning, security architecture requirements, and technical testing and code review.
