Blockchain defies a key UX tenet

Many of us with more than one keyboard layout probably had that annoying moment when we fed the Google Search bar a string of absolute gibberish. Unless this happened long ago, though, the results were likely still pretty coherent with what we were hoping to find. Why? Because Google’s engineers knew that sometimes, humans make mistakes, and designed the search engine’s interface in a way that accounted for the possibility of such a slip. 

As any good UX/UI designer knows, a product needs guardrails that will either prevent the user from making a mistake or will make the service more forgiving of user errors. Blockchain is an interesting case study from this perspective because one of its core features—immutability—makes it very unforgiving from the UX standpoint, but also works as a key selling point.

Immutability makes blockchain a reliable public ledger, working toward its decentralization, security, and transparency. The network keeps track of every transaction, storing them in blocks that are linked through hashes-their digital fingerprints. This makes any hampering immediately observable and easy to trace back to the exact block that was altered.

As a result, no party can remove shady transactions that it would want to keep under the radar or off the record. By the same account, no party can magically write in a transaction handing itself billions of coins out of thin air and propagate it across the network. Everyone is pseudonymous, but all the data is in the open. It’s a solid and strong design that deserves a standing ovation. 

On the user side, though, this makes for a pretty unforgiving experience. As long as the transaction was legitimate, i.e. signed off with the correct private key, there is no way for a user to reverse it. This makes for a major pain point behind stories such as that of a crypto exchange giving away millions’ worth of bitcoin by accident. With an online banking app, we rarely have to ping another user a test transaction before doing business, while with crypto, that’s a habit for everyone, including even Ethereum’s own Vitalik Buterin. 

Even this practice does not guarantee full security, though. In a man-in-the-middle cyberattack, a hacker compromises a communications device in the chain connecting the user with the server. In the crypto rendition of this attack, the criminal can target, for example, the computer the user plugs their cold wallet in to sign off a transaction. In this case, the attacker can spoof—forge—success on the first transfer and change the designated wallet on the second one, or even let the first one go through unchanged and seize the second transfer. Either way, the coins still end up in the wrong wallet.    

Mistakes in TradFi

To be fair, sending money to a wrong bank account, or making any other error, for that matter, isn’t too fun with traditional finance either. It’s not a bank’s job to hold the client’s hand, so if the client did designate a wrong beneficiary for a transfer, the best they can hope for is that the bank facilitates contact with this party. Should the recipient try to hold on to the money, though, the sender can take things to court, and there, their odds are actually quite solid, save for an occasional and very rare exception. Furthermore, banks do take certain precautions, such as having the client put in the target account number twice and scrapping the transfer if the mistake is spotted early on.

Similarly, most transfer services give the customers the option to cancel the transfer unless it has been picked up by the recipient. Canceling an order on an e-commerce platform is, if anything, quite commonplace. All in all, TradFi is more forgiving to errors: The room for hassle and headache is vast, and yet, there is the hope of getting the money back.

With blockchain, once a transaction is a few blocks in, it’s almost as good as set in stone—and the odds of getting the money back are pretty much zero. It is sometimes possible to ID the owner of a specific wallet, but this process mostly amounts to estimating a spectrum of possibilities and removing the least likely ones. Furthermore, to do so with any sort of precision, you would need NSA-level capabilities and access, as well as the creativity to match those.   

Very hypothetically, the sender could try to ping another tiny transfer to the same address with a message attached as arbitrary data. While there are several ways to do so, none of them are exactly the industry standard, and it is hard to vouch for their reliability. Furthermore, the decentralized ledger is meant for transaction data first, anything else is data pollution. But even assuming the unlucky sender did succeed in getting a message through, it is hard to imagine them receiving any response. And should they by some miracle manage to identify the unintended beneficiary, a lawsuit could be harder to win due to crypto’s own regulatory uncertainty.

Skin in the game

It is important to note that any value lost due to a wrongful transfer stems from things working as they were coded to work. As such, it is a testimony to the validity of the code is the law maxim, one could argue, but that is a bitter argument to make. People tend to get more sensitive when they have their skin in the game, and the crypto world has a story that proves it better than anything.

Back in 2016, a hacker managed to bleed dry the Genesis DAO, the first decentralized autonomous organization on Ethereum, through a loophole in the underlying smart contract. As a result, the community forked the blockchain, creating a new copy where the losses were reversed. This fork now has a market cap of more than $417 billion. Ethereum Classic, the version where the losses were never reversed, stands at less than $7 billion.

Granted, blockchain’s immutability must remain its time-honored feature, as it is central to a lot of what it has to offer. At the same time, Ethereum’s own massive market cap today works as the ultimate argument for why the decentralized space needs to strive for a less punishing user experience. There is safety in knowing you can afford a mistake, and this peace of mind is a major pre-condition for both institutional and mainstream adoption of crypto.

The blockchain space has enough tools to make this happen, such as smart contracts that can serve as escrows holding up funds until a specific event confirms the transaction. Such mechanisms can only rely on on-chain capabilities, but for extra security, they are best off when coupled with an off-chain verification tool, such as password protection and a manual transfer confirmation by the beneficiary, similar to picking up the cash with a traditional money transfer. It would also require additional off-chain verification means to make sure the person confirming the transaction is indeed the intended beneficiary, which is a direction some blockchain companies are exploring.  

The blockchain space has made several strides in making itself more user-friendly, but some of its most fundamental principles work as a hurdle on this path. To surpass those, it does not need to renege on its core promise on layer-1, but rather develop new layer-2 tools that would uphold them while still giving users more leeway for mistakes and errors.

About the author:

Asaf Naim is the Co-Founder and CEO of Kirobo, a decentralized application developer creating a safer infrastructure for Web3. Before founding Kirobo, which has created an "Undo" button for crypto transfers, he sharpened his entrepreneurial skills with a variety of projects and held senior positions in Israel’s Bank Leumi and Ernst & Young Israel.