How could On-chain Forensics solve crypto jurisdiction issues?

Increasing adoption of crypto and blockchain tech demands risk assessments and securities at the same extent as sometimes the value at stake is too high

Since the emergence of cryptocurrencies and blockchain technology till today 2022, companies across the industries have shown interest and eventually grown with time. But most of the time, prominent and well-known big names and brands working towards adopting the technology, security comes in front of them as a significant concern. 

With big firms comes the responsibility of their huge capital amount and risk on the funds, which those institutions can’t afford to lose if things go south. However, the emergence of technology also comes to better systems and techniques to make the industry more secure. Following the same, forensic monitoring techniques developed to counter the risks can revolutionize systems’ safety and eventually their large-scale adoption. 

Over the past decade, blockchain technology has evolved rapidly, where initially, there was only one cryptocurrency: Bitcoin. With Bitcoin came a new digital currency platform revolutionary with peer-to-peer transaction functionality that eliminated the need for intermediaries. Then after a few years came Ethereum, the platform that launched and brought features of smart contracts that enabled automating contractual agreements in blockchain applications. With time, the digital currency became programmable and stepped on the ways to develop decentralized applications that with time evolved and made a much more robust crypto ecosystem. However, apart from these developments in technology, some issues are still there that need to be addressed and resolved. 

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The most prominent of these issues might probably be security. Perception towards crypto is usually a wild west environment, which makes the image of this space such that institutions get skeptical about making any investments. While discussing it, numerous solutions emerge, but most agreed that effective mitigation of bad actors is important for technology in order to make financial systems better and secure. 

To counter the issues related to security, a new and more discerning blockchain policing system will be necessary. Think of a protocol designed on a mechanism such as slashing, that is, to liquidate validators’ funds when found doing the malicious activity. The mechanism that would be monitored by a forensic system rather than adjacent nodes would constantly monitor and eliminate wrongdoers on the chain automatically. More to this, it would do so after collecting the provable evidence that could confirm ill intent. 

Two notable outcomes led by next generation forensics systems. First, the taking away of funds only would be seen by misbehaving nodes themselves, which would maintain an incentive, to be honest, while keeping other nodes safe. 

Secondly, in some unlikely event such as compromising of a one-third system that could lead to an attack attempt, the forensic mechanism itself would shut down the nodes related to those attacks before they could further cause any permanent network instability and, in such a way, could allow rest of validator nodes to operate as they were. 

If this happens, the mechanism could be a game-changer for network security and accountability. Businesses then could operate on blockchains without any fears of attacks or errors that could affect capital. Moreover, having on-chain assets would be safer than keeping them anywhere else. Apart from this, the whole history of each transaction could be audited for complete transparency. 

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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