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Offline monsterer


Seems to me that nearly every bitcoin theft/heist in history could have been easily circumvented if transactions were somehow reversible.

The trouble is, how do you implement this feature in a sane way? Having both parties agree to reverse the transaction is one way, but that doesn't help for thefts.

What about somehow allowing transactions (or even a special transaction type) to be reversed by delegates, or even reversed by majority vote?


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Offline Ander

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Re: Reversible transactions - is there any sane way this could work?
« Reply #1 on: January 08, 2015, 05:56:39 PM »
Having transactions being reversible kindof defeats the point.  It then becomes just like the current money system, where whoever is in charge of being able to reverse transactions has the power.


Of course, there is one way to reverse transactions: hard fork and get the whole community to agree.  This imposes an extreme cost so it could only be used in the gravest emergencies, which seems appropriate.


A better way to prevent theft is for everyone to use multisig.
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Offline toast

Re: Reversible transactions - is there any sane way this could work?
« Reply #2 on: January 08, 2015, 06:40:28 PM »
Quote
What about somehow allowing transactions (or even a special transaction type) to be reversed by delegates, or even reversed by majority vote?

There's already escrow, I suppose we could make delegate escrow.

But yeah reversible transactions are the #1 thing the crypto space is specifically trying to replace...
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Offline CryptoPrometheus

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Re: Reversible transactions - is there any sane way this could work?
« Reply #3 on: January 08, 2015, 06:58:21 PM »
Eventually there will be trusted 3rd party insurance entities (like squaretrade) that will offer dispute mediation services for a spread.

As far as involuntary chargebacks, I don't think this could ever be a feature because (what @toast said above).
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Offline Frodo

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Re: Reversible transactions - is there any sane way this could work?
« Reply #4 on: January 08, 2015, 07:16:29 PM »
Quote
What about somehow allowing transactions (or even a special transaction type) to be reversed by delegates, or even reversed by majority vote?

There's already escrow, I suppose we could make delegate escrow.

+ If it is only a special type of transaction it doesn't help against theft, as a thief would obviously not use a reversable transaction type. Switching completely to reversable transactions is even worse though.

Nevertheless if there should be demand for something like a reversable transaction type, imo it would be best to simply make it reversable for a % fee taken by the network.

Offline monsterer

Re: Reversible transactions - is there any sane way this could work?
« Reply #5 on: January 08, 2015, 07:19:18 PM »
There's already escrow, I suppose we could make delegate escrow.

But yeah reversible transactions are the #1 thing the crypto space is specifically trying to replace...

I disagree. Crypto generally aims to let the end user own the value token for the currency. That's the primary driving factor behind decentralisation - you don't hold a IOU with no intrinsic value, you hold the cash in digital form.

Irreversible transactions are just a consequence of the design rather than a feature. IMO they cause a lot of problems. If it were possible to design a transaction type which was reversible (and fair) it could solve a lot of problems.
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Offline Shentist

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Re: Reversible transactions - is there any sane way this could work?
« Reply #6 on: January 08, 2015, 07:29:04 PM »
i don't see this coming, but maybe more use of multisig for security use.

Security is really the key for the massadaption. It is so much more convenient to outsource the security to a 3rd party and don't care about it.

Offline arhag

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Re: Reversible transactions - is there any sane way this could work?
« Reply #7 on: January 08, 2015, 07:30:27 PM »
Irreversible transactions are just a consequence of the design rather than a feature. IMO they cause a lot of problems. If it were possible to design a transaction type which was reversible (and fair) it could solve a lot of problems.

Irreversible transactions are a consequence of the decentralized and autonomous parts of the DAC. How is a DAC supposed to know whether it is "fair" to reverse a transaction when it doesn't know "truths" about the outside world and any "truths" fed into it are the opinions of some party.

Escrow and multisig really is good enough. You let the two parties involved in the transaction decide on the arbiter who gets to tell the blockchain whether it is fair to reverse a transaction.

Offline monsterer

Re: Reversible transactions - is there any sane way this could work?
« Reply #8 on: January 08, 2015, 07:37:36 PM »
Irreversible transactions are a consequence of the decentralized and autonomous parts of the DAC. How is a DAC supposed to know whether it is "fair" to reverse a transaction when it doesn't know "truths" about the outside world and any "truths" fed into it are the opinions of some party.

Escrow and multisig really is good enough. You let the two parties involved in the transaction decide on the arbiter who gets to tell the blockchain whether it is fair to reverse a transaction.

The DAC cannot 'know' of course. You need outside input and there are trust issues.

I don't think escrow covers all the bases - especially in the case of theft.

Imagine if you could give a trusted exchange the ability to reverse transactions in case of theft?
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Online Troglodactyl

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Re: Reversible transactions - is there any sane way this could work?
« Reply #9 on: January 08, 2015, 07:44:10 PM »
Irreversible transactions are a consequence of the decentralized and autonomous parts of the DAC. How is a DAC supposed to know whether it is "fair" to reverse a transaction when it doesn't know "truths" about the outside world and any "truths" fed into it are the opinions of some party.

Escrow and multisig really is good enough. You let the two parties involved in the transaction decide on the arbiter who gets to tell the blockchain whether it is fair to reverse a transaction.

The DAC cannot 'know' of course. You need outside input and there are trust issues.

I don't think escrow covers all the bases - especially in the case of theft.

Imagine if you could give a trusted exchange the ability to reverse transactions in case of theft?
Indeed, imagine that. Having compromised the exchange, the thief would now be able to reverse transactions at will, rather than only making off with the poorly secured funds.

What is this "trusted exchange" of which you speak, and if it existed how would theft from it occur in the first place?

Offline arhag

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Re: Reversible transactions - is there any sane way this could work?
« Reply #10 on: January 08, 2015, 07:47:10 PM »
Imagine if you could give a trusted exchange the ability to reverse transactions in case of theft?

Horrible idea in my opinion. Now we are exposed to the risk that this exchange decides to go rogue and reverse transactions (and take their cut from the person they reverse it to) to pull off double spends. What if I don't trust that exchange? Why should I be exposed to that risk of double spend every time I accept cryptoassets for goods/services?

Now, if you do trust that exchange why not keep your balances in a 2-of-2 multisig where you hold one of the keys and the other key is held by the exchange. Now if your hot client gets hacked, your funds cannot be stolen without the cooperation of the exchange. When you pay someone, the exchange can simply allocate some of the funds for the payment but not officially pay the merchant (with an irreversible transaction) until they verify the transaction was not theft. This is good enough protection against theft in my opinion. And more importantly it is opt-in for each user rather than being imposed on everyone by the network.
« Last Edit: January 08, 2015, 07:51:12 PM by arhag »

Offline monsterer

Re: Reversible transactions - is there any sane way this could work?
« Reply #11 on: January 08, 2015, 07:51:29 PM »
Indeed, imagine that. Having compromised the exchange, the thief would now be able to reverse transactions at will, rather than only making off with the poorly secured funds.

What is this "trusted exchange" of which you speak, and if it existed how would theft from it occur in the first place?

Obviously you don't set it up that way. You could imagine a system whereby only one party has the ability to reverse transactions, which would cover your first point.

Secondly one definition for 'trusted exchange' is legitimate business managing millions of dollars of customers funds.

How can theft occur? Inadequate security measures. Take bitstamp for instance - their hot wallet was compromised, yet they are a trusted exchange by my definition.
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Offline monsterer

Re: Reversible transactions - is there any sane way this could work?
« Reply #12 on: January 08, 2015, 07:54:38 PM »
Now, if you do trust that exchange why not keep your balances in a 2-of-2 multisig where you hold one of the keys and the other key is held by the exchange.

Impossible. You could trade within the exchange, make a huge loss and then refuse to release the key to the exchange at withdrawal time, locking up the balance and preventing the exchange from moving the funds out to the winner(s) of all your losing trades.
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Offline arhag

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Re: Reversible transactions - is there any sane way this could work?
« Reply #13 on: January 08, 2015, 08:04:03 PM »
Now, if you do trust that exchange why not keep your balances in a 2-of-2 multisig where you hold one of the keys and the other key is held by the exchange.

Impossible. You could trade within the exchange, make a huge loss and then refuse to release the key to the exchange at withdrawal time, locking up the balance and preventing the exchange from moving the funds out to the winner(s) of all your losing trades.

My example was regarding paying merchants for goods and services, but it still could work in certain cases with centralized exchanges too. Whatever "payment" you make, whether it is in exchange for goods/services or the money allocated for a bid/ask order, you would need to create and sign the transaction and send it to the exchange. The exchange could sign that transaction and broadcast it, but they don't until they verify the payment should become irreversible. If they decide to reverse, they can simply throw away that transaction and create a new signed one (which they give to the payer to sign and broadcast) that moves the funds to a new balance so that the payer has assurance that the old transaction cannot be used. In the case where the bid/ask order is actually matched, at some point the exchange needs to settle with the parties involved with an irreversible transaction. Prior to that point though, the exchange could roll things back.

But anyway, I am not concerned with the case of trading on centralized exchanges because I think the future is trading on decentralized exchanges like the ones on BitShares. And I think multisig protection (2-of-3 for example where you have one in the hot client, one in cold storage, and the third by a trusted business) is good enough to prevent your funds from being stolen or traded against your will due to hacking attacks.
« Last Edit: January 08, 2015, 08:07:57 PM by arhag »

Offline roadscape

Re: Reversible transactions - is there any sane way this could work?
« Reply #14 on: January 08, 2015, 08:04:41 PM »
Couldn't you do it like this?
  • Issue your own (retractable) asset: PolicedUSD
  • Set up buy/sell walls around 1:1 PolicedUSD:BitUSD
  • If PolicedUSD is stolen, you (the Police) take it back from the theif
If you convince people that PolicedUSD is safer and your rules are fair, then you have a viable product

ninja edit: "people" meaning customers and merchants
« Last Edit: January 08, 2015, 08:06:24 PM by roadscape »
http://cryptofresh.com  |  witness: roadscape

 

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