How Could On-Chain Forensics Solve Crypto Jurisdiction Issues?
The growing adoption of crypto and blockchain technology requires risk and security assessments to the same extent that sometimes the value at stake is too high
From the emergence of cryptocurrencies and blockchain technology to now 2022, companies from all industries have shown interest and ultimately grown with the times. But most of the time, big names and prominent and well-known brands strive to adopt the technology, security comes before them as an important concern.
With large corporations comes the responsibility for their huge capital and risk on funds, which these institutions cannot afford to lose if things go wrong. However, with the emergence of technology also comes better systems and techniques to make the industry safer. In the same vein, forensic surveillance techniques developed to counter risks can revolutionize the security of systems and eventually their widespread adoption.
Over the past decade, blockchain technology has evolved rapidly, when initially there was only one cryptocurrency: Bitcoin. With Bitcoin came a revolutionary new digital currency platform with peer-to-peer transaction functionality that eliminated the need for middlemen. Then, after a few years, came Ethereum, the platform that pioneered and brought smart contract functionality to automate contractual agreements in blockchain applications. Over time, digital currency became programmable and trodden ways to develop decentralized applications that evolved over time and created a much more robust crypto ecosystem. However, apart from these technological developments, some problems remain and need to be addressed and resolved.
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The most important of these issues could probably be security. The perception towards crypto is generally a Wild West environment, which makes the image of this space such that institutions become skeptical of making investments. In discussing, many solutions emerge, but most agree that effective bad actor mitigation is important for technology to improve and secure financial systems.
To counter security issues, a new, more demanding blockchain policing system will be needed. Think of a protocol designed on a mechanism like slashing, i.e. to liquidate validator funds when found doing the malicious activity. The mechanism that would be monitored by a forensic system rather than adjacent nodes would continuously monitor and automatically eliminate bad guys on the chain. Moreover, it would do so after gathering provable evidence that could confirm malicious intent.
Two notable results driven by next-generation forensic systems. First, the fundraising would only be seen by the misbehaving nodes themselves, which would maintain an incentive, to be honest, while protecting other nodes.
Second, in an unlikely event such as the compromise of a third party system that could lead to an attempted attack, the forensic mechanism itself would shut down the nodes linked to these attacks before they could cause further harm. permanent instability of the network and, in such a case, could allow the rest of the validating nodes to function as they were.
If that happens, the mechanism could be a game-changer for network security and accountability. Companies could then operate on blockchains without fear of attacks or errors that could affect capital. Also, having on-chain assets would be safer than keeping them anywhere else. Other than that, the entire history of each transaction could be audited for full transparency.