The post Circle Explores “Reversible Transactions” Sparking Debate Over Blockchain’s Core Principles appeared first on Coinpedia Fintech News
Stablecoin giant Circle is exploring ways to let users “reverse” transactions, a step which is almost unheard of in the crypto world. This move could challenge some of crypto’s core principles and has already sparked a debate across the industry.
Let us explore what this means and what are its implications for the industry.
Circle Weighs Reversible Transactions
According to a report from Financial Times, Circle’s President Heath Tarbert explains that if there exists a system to refund money in cases of fraud or mistakes, it could make people more confident using stablecoins and help them gain wider acceptance, like regular bank money.
“We are thinking through, whether or not there’s the possibility of reversibility of transactions, but at the same time, we want settlement finality,” Tarbert said. He notes that there is a ‘tension’ between sending money instantly and making it irreversible.
However, introducing this reversibility would mark a significant shift for crypto, which has traditionally valued the “immutability” of the blockchain. Some crypto fans may also see this change as almost breaking the core rules of the industry.
Exploring Reversibility
Tarbert also shared that developers are exploring whether some blockchains could have a certain degree of reversibility for fraud, as long as everyone involved agrees.
He added that while blockchain, stablecoins, and smart contracts are often seen as technologically superior, traditional systems still have certain advantages that crypto has not fully matched.
Tarbert’s comments come months after a Trump-era proposal was abandoned, which would have required crypto companies to refund customers if their accounts were hacked.
Circle’s Arc Faces Pushback
Circle recently revealed that it is testing a new blockchain called Arc for financial institutions. This would let banks and asset managers use stablecoins for foreign exchange payments.
However, some executives and developers have criticized Circle’s Arc blockchain for being too centralized, arguing that it goes against the original idea of blockchain, letting people make transactions without relying on banks or middlemen.
Circle claims that payments on its Arc blockchain cannot be directly reversed. Instead, it could create an extra layer where all parties agree to make counter-payments, similar to how credit card refunds work.
Circle To Add Confidentiality Layer
Meanwhile, Circle is also planning to improve confidentiality by hiding the size of transactions while keeping wallet addresses visible. Tarbert said that this layer of privacy is useful for banks and clients who wish to keep payment information confidential.
Although Circle’s plans challenges the long-standing principles of crypto, they also highlight the industry’s efforts to bridge the gap between decentralized technology and mainstream finance.