Omni Introduces Ability To Freeze Funds Raises Ethical Questions
Centrally managed tokens on the Omni platform will allow creators to freeze funds on specific wallets or address. With the rise of cryptocurrency being used as ransomware or hackers stealing massive amounts of crypto through bugs or security exploits, this is an interesting feature that users must consider.
This comes with a couple of caveats, however, to prevent a total abuse of power. Any ICO project which has already issued tokens to participants on the Omni blockchain are ineligible, as so are tokens issued via a fixed amount. Additionally, any crowd sale which issued tokens on top of the Omni Layer cannot freeze their tokens as well.
Furthermore, freezing is not instant, with owners of centrally issued tokens waiting a mandatory 4096 blocks before they can freeze an address. It remains unclear if this is a feature for every centrally issued token via Omni, or this is an opt-in feature, but either way, the implications are there.
Ethically, this goes against most cryptocurrencies ethos of “being your own bank.” Most users are aware of the double-edged sword that is being responsible for your money.
On the one hand, you truly own your money. There is no worry of the government collapsing, and your money disappearing. There is no worry of physical destruction burning, stealing, or flooding your wealth away; it is restored by re-entering your passphrase or private key on another device.
On the other hand, if you forget your passphrase, pretty much there is nothing you can do about it. There are wallet recovery services that can brute force your wallet, but those aren’t guaranteed to save you, especially if you practice smart security measures and use a long passphrase.
If you delete your wallet file, lose it from an incorrect address, get scammed from a transaction or crowdsale that went sour, there’s no legal recourse for the user to take. There’s no company to call, and there’s very little that can be done.
With the rise of stolen cryptocurrency, especially seen with ransomware like WannaCry, is this something that cryptocurrencies should integrate into their own blockchains? Or is the risk of abuse of power just too much? It’ll be interesting to see how tokens on Omni utilize this, and if they are able to thwart any hackers successfully, or simply just put funds on hold.