Making Bitcoin Theft Impossible With The Undo Button

One of the things a lot of people are concerned about when learning more about Bitcoin is whether or not their coins can be stolen at any given time. Some experts might argue that as long as users store bitcoins in a wallet they fully control, the chances of Bitcoin theft are unlikely. But at the same time, there are ways to make Bitcoin more secure, according to a Cornwall University professor.

Also read: Cash Neither Helps Nor Hinders Bitcoin Adoption That Much

Reducing Bitcoin Theft To Near Zero

TheMerkle_Fraud Prevention Bitcoin Theft

When putting the end user in full financial control, there is always a risk of funds being stolen down the line, Most consumers have never experienced financial control in their lives, especially not when technology is involved. Bitcoin is a far greater technical concept than most people realize, and reducing theft without properly understanding the technology is not possible.

A Cornwall University professor claims he has found a solution to reduce Bitcoin theft. In fact, his idea might remove Bitcoin theft from the ecosystem completely, or reduce the chances of it happening ty a significant margin. No additional technology or centralized party is needed to achieve this goal, as the digital currency’s source code offers Bitcoin theft protection already.

Bitcoin transactions could be sent to a vault, which acts as a savings account without relying on a bank or other central party to achieve this goal. However, this vault would issue recovery keys for the particular address used, allowing users to recover their money if they were subject to Bitcoin theft. Some people might see this as a glorified blockchain rollback option on an individual user level, though.

Should this principle be applied to the real world, Bitcoin theft suddenly becomes far less appealing to hackers. There is no guarantee of them getting away with the funds, as the transactions could be undone by the person owning the money. This removes any incentive to attempt Bitcoin theft in the first place. But what if the hacker manages to steal the recovery key as well?

Such a scenario would actually create a stalemate as both parties can undo any and all transactions completed by the other. It then becomes a matter of who will blink first and give up on the funds in question. Without having the ability to spend money, Bitcoin theft can be reduced to near zero.

This sounds like a great concept on paper, but it remains to be seen if this has any chance of becoming a reality. Creating such an “undo” button would turn the entire Bitcoin ecosystem on its head and creates a lot more questions than answers. It is important to address Bitcoin theft, but there is no doubt other solutions can be looked into as well.

Source: Blockcy

Images credit 1,2

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  • Cyberdexter

    Uhmmmm what? No thanks, might as well use PayPal again or face CC charge-backs…

  • Foresee issues with this protocol such as people not following through with transactions…

    • Completely agree, Bitcoin does not need a pseudo chargeback feature.

  • ebliever

    The prof hasn’t thought this through if he doesn’t think this can be gamed. People will abuse the vault/rollbacks all the time, creating a whole new level of hassle. IMHO the _only_ way to manage this sort of risk is through the use of trusted 3rd parties, for better or worse, since it takes an intelligent and judicious agent to identify acts of theft and distinguish them from valid transactions. (With the caveat that smart contracts can in principle fulfill the same role in situations where the good being purchased is digital and auditable by the smart contract itself.)
    For example you might not care about being able to obtain a chargeback when buying some coffee. But if you were using bitcoin to buy a used car, you might find it worthwhile to pay a 0.5% escrow fee to a 3rd party service to manage the risk of dealing with a (possibly) disreputable dealer. Let’s let the free market work out such services, as it already is.