Again and again there are spectacular thefts from crypto money. Researchers have therefore considered how Ethereum transactions could be made reversible.
A research team from Stanford University has put forward a proposal for how transactions can be implemented on the Ethereum blockchain that can be reversed. The concept provides for the introduction of two new token standards, ERC-20R and ERC-721R, based on the existing standards ERC-20 and ERC-721. A transaction with tokens generated according to these new standards should be able to be reversed within a certain time window of around three days before it then becomes irreversible. Tokens are units created by block entry that can represent certain values ​​or rights.
A basic principle of blockchain technology is that once entries have been made in the distributed database, they cannot simply be undone. With a cryptocurrency, this means that users are left out in the cold in the event of theft or if they accidentally enter an incorrect address or an excessive amount when making a payment. The money is gone. Or: somewhere else.
More customer protection for cryptocurrencies?
So far, the only possibility is that the majority of participants in a blockchain network agree to accept an alternative version of the blockchain as the valid one in the future, in which certain transactions did not take place. However, establishing such a consensus in a decentralized system is not trivial. There is always a risk that participants will not follow suit and the blockchain will split, with two independent variants continuing in the future.
The proposal is explicitly not about replacing Ethereum’s native currency, ether, or existing tokens, emphasized Kaili Wang from the research team in a longer Twitter thread. However, the numerous, massive thefts made it necessary to add cryptocurrency features for more protection and user-friendliness.
The decentralized court decides
According to the concept, the reversal of a transaction could then take place in a kind of civil process. For example, a robbed user can report to the token’s governance contract with evidence of the theft within the deadline and pay a deposit. It would then be up to a “decentralized court” of whatever composition to decide whether the tokens in question should be frozen in a first step.
If the judges decide in favor of a freeze, the affected tokens will be blocked. The parties to the dispute should then have an opportunity to present evidence – and the judges must decide whether the tokens are returned or not. More details can be found in the research team’s paper.
approval and rejection
However, Wang stressed that it is still an incomplete proposal, which should stimulate debate and new ideas. The proposal did indeed provoke controversial reactions in the crypto scene. Former cryptography professor and current head of cryptocurrency Avalanche Emin Gün Sirer spoke of a great idea and referred to a similar concept he had developed with other cryptographers.
Others couldn’t get anything out of it. Developer Matthew Di Ferrante explainedSmart contracts would probably not even accept such reversible tokens and would hardly be able to process such sudden retransfers of received tokens.
other critics like the blockchain researcher known in the scene under the Twitter name FatManTerra criticized the model of the decentralized court. It opens the door to corruption, manipulation and fraudulent remittances. A feature to undo theft would be great for sure. However, the problem is difficult to impossible to solve within a blockchain.
