The irreversibility of blockchain transactions is often described as evidence of cryptographic security. because The deal cannot be undoneThere is no way for scammers to initiate a chargeback after transferring money to purchase a product. It offers the ultimate level of protection for sellers – especially those who may have been burned in the past using a third-party service like PayPal, where chargebacks are not only common but also hard to challenge if they’ve been scammed.
There is an argument to be made that the irreversibility of the blockchain is one reason why it is such a secure technology. However, there are downsides to this unique property of the blockchain. After all, blockchain users are only human, and Mistakes are often made. The problem is that blockchain wallet addresses are basically a long string of random numbers and characters, and it’s very easy to make a mistake when entering one manually. If the address is incorrect and the transaction is confirmed, these funds will either end up in the wrong wallet or be lost to the ether forever, never to be seen again.
A second problem arises from the complexity of DeFi, where users often conduct a series of cross-chain transactions. For example, they might borrow from a protocol on one chain, and then link those tokens to another chain before depositing them in a liquidity pool. This is a three-step deal that traders may take to take advantage of arbitrage opportunities, but these transactions are very risky should any of the steps of the process fail.
Why Can’t Blockchain Transactions Be Reversed?
Final deal is the key Design Feature of the blockchain is essential due to its decentralized nature. Unlike bank transfer, which is performed by a trusted third party, blockchain transactions are processed by validators when consensus is reached between the different nodes that make up the network. Since blockchain records are stored across multiple nodes, the distributed ledger is immutable, meaning it cannot be changed by any single node or user. If someone tries to change a transaction, the rest of the network will learn about it and reject that change.
Blockchains are designed this way for security reasons, as it removes an issue known as “double spending”, where the user may attempt to cheat and use the same funds to carry out multiple transactions.
So due to the way block chains are decentralized, there is no way to reverse the transaction. The only way the money can be returned is if the person who received it decides to return it. This can be a problem, because if the money is sent to a complete stranger, that person might be inclined to keep it, because they would have no problem doing so.
Problems caused by irreversible transactions
While many people see the irreversibility of the blockchain as a good thing, it can cause major problems when mistakes are made. There is a strong argument to be made that if cryptocurrency is to replace fiat as the dominant form of payment, people will need a way to reverse transactions when money is sent to the wrong address.
Although most errors are eliminated simply by copying and pasting addresses or scanning a QR code, these methods are not entirely flawless. It is possible to accidentally change the address after scanning it, for example. Alternatively, the sender may enter the wrong amount of coins to be sent. This happens more often than people realize because people often price things in US dollars or another fiat currency, and then send the equivalent amount in cryptocurrencies. In order to send $50 in BTC, the user will have to transfer 0.0027 BTC at the current rate. But it is very easy to send 0.027 BTC ($500) by mistake.
However, it’s not just bugs that are a concern. Another big problem is wallet hacking. In traditional banking, users are assured that if their bank account has been hacked and someone transfers money from their account, the bank will eventually refund the amount lost. This will not happen with blockchain transactions, as there is no central body capable of refunding the funds. Security is the sole responsibility of individual users, so if your wallet gets hacked in some way, you’ll almost certainly say goodbye to whatever money was in it, forever.
Why do we need a safety net
It is clear that many people will benefit from the ability to reverse blockchain transactions. However, the difficulty is to enable this in a way that does not jeopardize the security of the blockchain. If someone can send a payment for goods or services and then reverse that transaction once the product is delivered, the crypto will lose all credibility and no one will use it anymore.
It is a difficult problem to solve but there are some smart minds who have already come up with a solution. A good example of this is t3rn . protocolwhich has developed a platform that implements smart contracts with an inline fail-safe mechanism to ensure that complex transactions are properly processed, or just the opposite If any problems occur.
T3rn provides a good illustration of how its fail-safe mechanism works in this regard Blog post. Imagine a user planning a five-step transaction that involves linking tokens from Ethereum to Polkadot and then to Moonbeam, with several swaps and additional deposits along the way. These types of transactions are usually carried out by DeFi traders, but they can cause problems if the user does not have enough coins in their balance to pay the gas fee for each transaction. If the gas runs out in the third or fourth step, the tokens will remain in that step, causing a major headache for the trader. They would almost certainly miss any arbitrage opportunity they had hoped to exploit.
With t3rn this is not a problem. Its unique fail-safe mechanism involves placing the assets involved in each transaction step into an escrow account. This way, it will only be released once each step of the transaction has been successfully executed. If any of the steps fails, t3rn will simply cancel the transaction and all previous steps will be rolled back. As you can see in the example above, Bob will simply get all of his original ETH tokens in his wallet, without losing any gas fees.
The great thing about t3rn is that it allows users to configure complex transactions through a simple user interface, where each step is arranged in a chronological manner. The protocol supports multiple wallets as well, including MetamskAnd the Ambire Wallet and others.
Paving the way for further adoption
The t3rn-enabled blockchain reversibility could prove to be a transformation in the crypto industry. It opens the possibility for users to better protect their digital assets by offering a security mechanism for absolutely every transaction they make. If someone mistakenly sent $500 worth of tokens instead of just $50, they now have a way to reverse that transaction and correct the error, without relying on the honesty of the person who received the money.
This ability is an essential guarantee that will benefit regular users and DeFi traders alike, and possibly create greater confidence in crypto in general. While the end of blockchain transactions cannot and should not be sacrificed, people still need a way to avoid being penalized for honest mistakes. By providing this capability, t3rn can go some way to qualifying the next generation of more cautious crypto users who need some kind of safety net.