For those of us already deeply in the trenches of crypto, we reflexively understand why cryptocurrencies are the future of everything from finance to entertainment to education and beyond. But for the mass market, the billions of people who still don’t own crypto or even a crypto wallet, cryptocurrencies will never be anything more than a fad because of one primary fault: The risk of losing your money through a careless mistake.
Billions Built On A Flaw
The mainstream media is filled with such stories—be it someone forgetting the private keys of their wallet or someone else accidentally sending their tokens to the wrong address and being unable to reclaim them. One example: In 2020, a user accidentally sent 28,050 AAVE tokens to that token’s smart contract address rather than to the appropriate DeFi address, resulting in a permanent loss of AAVE tokens worth $1.1 million at the time. Another publicly known and documented example is the transfer of $1 million USDT to the USDT contract itself.
In all, millions of dollars of misappropriated tokens are forever lost in smart contracts. Much of the Ethereum-based crypto world relies on the ERC20 standard, despite knowing that this flaw exists and has resulted in the loss of millions of dollars through user error.
Until the crypto sphere has a way to prevent human error, the crypto space is unlikely to attract the masses who, rightly, fear a fat-finger mistake will cost them their life savings.
ERC 223 Benefits Over ERC 20
To address this risk, the Callisto Network Security Department, led by Dexaran, the world-renown developer and security expert, has proposed the ERC 223 token standard, which limits the ability of a user to make such a mistake.
In simple terms, ERC 223 creates a framework in which a receiving contract can reject a misdirected transaction. If a user tries to send an ERC 223 token to a contract that is not intended to receive it, the transaction fails, the tokens are returned to the sender’s address, and the user loses nothing.
When a crypto user sends an ERC 223 token to a particular contract, that contract receives notice that an event is happening — that a token is being sent. If the contract is prepared to accept tokens, all is fine, and the transaction completes. If the contract is not designed to accept a token deposit, it will reject the transaction. Though the gas fee is lost, the tokens are not transferred; thus, the user does not lose his/her crypto.
With ERC20 tokens, the process is different. The core of the ERC20 problem is this: ERC20 tokens have no internal structure for “event handling.”
The receiving contract is not made aware that an event is happening. It simply receives the tokens sent, regardless of whether it is designed to receive them or not. If it’s not designed to receive them, then those tokens become trapped in the contract—no way for the sender to see them or retrieve them. For all intents and purposes, those missent tokens are permanently lost.
Better Standard As A Driver Of Adoption
By being fully compatible with Ethereum-based blockchains and the ERC 20 features, ERC 223 provides a viable solution to one of the main causes of cryptocurrency loss. The result being that crypto users no longer face the possibility of sending their tokens to a dead address from which they cannot reclaim them.