Ethereum and other cryptocurrencies are great, but the ability to send tokens to the wrong address, often with no way to reverse the transaction, is a real problem. Here’s a solution that doesn’t involve changing the platform itself.
So earlier this week I did a stupid. I had wanted to convert about $250 in ENG tokens to TRX tokens. I had tried to do it the other day, but I didn’t have enough ETH for the transaction to go through and it was cancelled. I tried again this morning, still half asleep. Little did I realize that the ENG contract address was still in my buffer! So when I thought I had copied the correct address, I had actually ended up sending the damn tokens to the contract wallet. Things should have gone differently, and not just on my end.
Thanks New York
Now, while I could have prevented this issue by making sure to be more aware of what I was doing, and waiting until well after 6AM to do it, part of the problem is that I couldn’t use an exchange or link my wallet. You see, I live in New York, which has very strict rules about cryptocurrency. I used to use Bittrex, but they were forced to stop serving NY. So I used CoinSwitch instead. I couldn’t even link my MetaMask wallet to CoinSwitch, because it’s not an available feature in NY. So instead I had to manually enter the addresses, and I messed up big time.
Now, while NY is a problem in and of itself, I think the high risk of sending to a token contract address, etc is poor UX, to be perfectly honest!. And one of the greatest pitfalls of cryptoassets and blockchain right now is horrible UX. Not only is there often a significant learning curve, but even after you’ve learned everything, there’s still a lot that you need to handle just to make sure you’ve properly given your tokens to the right person or contract.
ERC20 is a problem because it doesn’t implement any safeguards against lost currency. It’s totally the responsibility of the individual to make sure the address is exact. Dead addresses, addresses of the token contract, etc are all potential black holes for cryptoassets, an plenty of money is lost each year from these kinds of errors. Of course, plenty of physical money is accidentally lost and destroyed each year, but there’s really no need for this issue in crypto.
There are solutions in the works, and there are a number of different emerging token standards. ERC223 is one potential standard that could replace ERC20. It implements reaction operations to ensure that the tokens are being sent to an address that can use the correct token. There are also a number of attempts to link domain names to wallet addresses.
Domain Names for Wallet Addresses
I recently preordered a domain name from Unstoppable Domains. It’s an example of an alternate DNS root. The idea of this project is to link Ethereum wallet addresses to a user readable domain name. It would be so much easier to send ETH and other tokens to danielgoldman.zil than to 0x7cEec4d52d270BC1c0dBF11D7e0174f762d489Ca, which happens to be one of my main Ethereum addresses. Is it still possible to make an error? Sure, but it’s a lot easier with domain names. There’s a reason why we use them.
Unfortunately, because this system is an alternate DNS root, it’s not supported by most browsers. That being said Unstoppable Domains was a grantee of the Ethereum Foundation for Browseth, which is a web3 library for ethereum and is a grantee for Zilliqa, so there’s a decent amount of potential. Moreover, domains are only $10 in preregistation, so for the $250 that I lost, I could have preregistered ten domains.
A secondary option from changing the paradigm of Ethereum and other blockchains themselves is to implement an insurance policy. I’ve already written about crypto-insurance when discussing risks surrounding exchanges. This idea could be extended to lost funds insurance. An ICO could give an institution the initial funds needed, as is often the case in the crypto world. The institution should probably be a bit more centralized, because someone would need to investigate the incident and ensure that there really were lost funds. But with a small fee, we could ensure that our money is safe.
Overall, cryptoassets and blockchain still suffer from horrible UX. Insurance is one potential option to protect our assets. But we’re not living in the 90s anymore. UX for internet based services need to be solid. Unfortunately, aside from insurance policies and linking wallets to human readable addresses, one of the few options is to significantly revamp the blockchain systems themselves. But such an overall is complicated and would require adopting new standards. Whatever method, or combination of methods, are chosen, it has to be done soon, in order for blockchain technology to receive widespread attention.
Note: This article may contain referral links to help support my work and also recoup my lost money. Moreover, this article is not meant to be investment advice. It’s just my own views on the matter.