Blockchain’s future lies in reversible transactions

Block chain technology is amazing. We all know it well, especially those who have gone deeper into it. Transactions on the blockchain are incredibly secure, almost unbreakable, something we cannot claim about traditional payment methods. But it is not without problems that must be solved.

One of the biggest problems is the irreversibility of transactions. If you’ve ever made a crypto transaction, you know how important it is to enter the correct information. If you don’t, the funds may go elsewhere and likely be lost forever.

Since this can be problematic for larger transactions, we wanted to cover why it is the case in this article. More importantly, we will delve deeper into why transactions on the blockchain should be reversible and how it might work. It may sound impossible, but there are always ways. Let’s see what they are.

Problems arising from irreversible transactions

It is clear that the blockchain was created to ensure the security of the entire network while remaining decentralized.

However, this always meant that it would not be possible for transactions to be changed or reversed. That’s because when a transaction is made, it’s written into the blockchain. If we were to change that information, we would change the entire transaction and break the system.

If you could change a transaction on the blockchain that is supposed to be final, it wouldn’t make much sense to have the whole system in the first place.

However, that doesn’t mean we shouldn’t find a way to make reversible transactions a reality while ensuring that the system stays true to the nature of the blockchain to keep it decentralized.

We need to change it because the current system leads to two significant problems – technical errors and hacks.

Technical errors

Technical errors are the system’s biggest problem when it comes to irreversible transactions. People make mistakes all the time, but once you misspell an address in the world of cryptocurrency, there’s no going back. Once the transaction is done, it’s over.

You must trust the owner of that address to return the money to you. However, many addresses are not operational, which is quite common with many cryptocurrencies, especially Bitcoin. So when the funds go to such an address, it’s over.

Currently, many cryptocurrencies have a large portion of burned coins – the coins that are left at inaccessible addresses. This shows how problematic errors can be.

Hacking attempt

Another major problem with irreversible transactions is successful hacking attempts. If someone gets hold of your money, it’s almost impossible to get it back.

With banks and other payment systems operating centrally, the central authority can quickly reverse the transaction and return stolen funds. But that is not possible with blockchain transactions since there is no centralized authority to return the funds.

Of course, that doesn’t mean that centralization is the key here, but it does mean that some other fail-safe system or mechanism is needed to avoid such problems.

Reversibility is key

The need for reversibility has long been recognized to make using cryptocurrency and any other transaction on the blockchain easy.

There have been attempts to change the system. For example, the aptly named Reversecoin was a small attempt to create a coin that would feature irreversible transactions. It didn’t go through, but the basic idea wasn’t too bad.

It envisioned a timeout period and a set of keys so that a user would have the chance to stop a transaction from going through and effectively reverse it. With the set of keys, even stolen amounts can be returned by reversing the transaction with the correct keys.

Naturally, we also have solutions built into the current system, such as multi-signature smart contracts that require multiple users to complete transactions. They represent a good system to prevent hacking attempts from succeeding, but they are not always enough.

We get something more with a solution called t3rn. It is a smart contract hosting platform that uses a fail-safe mechanism that guarantees successful execution every time. It effectively locks committed changes so they can be easily reverted if they fail.

One of the key partners of t3rn is Polkadot, and it already has other projects trying to achieve a similar thing to t3rn, such as Moonbeam or Radicle. They know that reversibility is important, especially when dealing with cross-chain transactions. With the help of smart contracts and built-in fail-safe mechanisms, there is a chance to achieve that.

And if we can get to reversible transactions without compromising the decentralized nature of the blockchain, why not do it? Irreversible transactions can be very problematic, as you’ve already seen, so a solution that doesn’t affect decentralization is definitely needed.