How to stop crypto thieves in their tracks: use reversible transactions | Crypto

How to stop crypto thieves in their tracks: use reversible transactions

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– Reversible transactions could help reduce the impact of crypto theft
– A prototype has been created by Stanford University researchers
– The proposal has been put together by blockchain researchers from Stanford
– The proposal is not to replace ERC-20 tokens or make Ethereum reversible
– The proposal is an opt-in standard that “simply allows a short time window post-transaction for thefts to be contested and possibly restored.”
– If someone has their funds stolen, they can submit a freeze request on the assets to a governance contract
– This will then be followed up by a decentralized court of judges that need to quickly vote within a day or two at most to approve or reject the request
– Both sides of the transaction would also be able to provide evidence to the judges so that they have enough information, in theory, to come to a fair decision
– For NFTs, the process would be relatively straightforward as the judges just need to see who currently owns the NFT, and freeze that account.
– However, the proposal admits that freezing fungible tokens is much more complicated, as the thief can split the funds among dozens of accounts, run them through an anonymity mixer or exchange them in other digital assets
– To counter this, the researchers have come up with an algorithm that provides a default freezing process for tracing and locking stolen funds.
– They note that it ensures that enough funds in the thiefs account will be frozen to cover the stolen amount, and the funds will only be frozen if theres a direct flow of transactions from the theft.
– Podcaster Anthony Sassano isnt a fan of the proposal, tweeting that I’m all for people coming up with new ideas and putting them out into the ether but I’m not here for TradFi 2.0. Thanks but no thanks
– Sassano explained that he thinks that reversal control and consumer protections should be placed on the higher layers such as exchanges, and companies rather than the base layer (blockchain or tokens)

How to stop crypto thieves in their tracks: use reversible transactions

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