Some people in the crypto community think that reversibility goes against the very idea of blockchains. Reversible blockchain transactions could be a powerful weapon against hackers, but it would also make cryptocurrencies more appealing to mainstream users. 

A team of researchers from Stanford University has published a proposal detailing how reversibility could work, and their ideas are stirring up debates about crime and fraud prevention. The proposal suggests that mutability—the ability to reverse blockchain transactions—would help prevent crime.

One advantage of cryptocurrency is that it gives the market – individuals, traders, and banks – the power to decide if reversible transactions are wanted. A new (reversible) cryptocurrency would not only help assess whether there is a demand for reversible transactions but also test the theory that reversibility dissuades crime.

While cryptocurrency is not only used for the dark web, it is often mistakenly portrayed as such. Unfortunately, fraud, scams, and other types of crime have occurred more frequently as the amount of money invested and traded has grown.

Using blockchain forensics is one of the main ways law enforcement addresses crime in crypto markets. Blockchain forensics involves analyzing transactions to follow and recover stolen or fraudulently obtained cryptocurrency assets. 

In the volatile world of cryptocurrencies and non-fungible tokens, blockchain forensics is playing an increasingly important role in compliance and regulation. By closely examining transactions recorded on blockchains, investigators can look for signs that people are trying to hide or disguise their assets.

Some common methods for hiding cryptocurrency ownership or whereabouts include frequently switching ledgers, utilizing tools that mask or create false IP addresses, making multiple small transactions, and using a tumbler or mixer service which collects crypto from many sources to disguise its origins.

Reversibility would significantly decrease the chances of melted or lost cryptocurrency, making it more appealing for investors and other potential users. If a user accidentally sent their currency to the wrong address, they could cancel the transaction as long as it had not yet gone through. This would reduce banks’ hesitance in involvement with cryptocurrency out of fear of fraud as well as help make cryptocurrencies more viable options for exchange and investment.