Batch Processing Cryptocurrency Transactions Using Unspent Transaction Outputs
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Solution Overview
Problem
Small entities with infrequent cryptocurrency transactions face high costs and privacy concerns due to the lack of centralization and asynchronous management in batch processing of UTXO-based transactions, which are optimized for larger entities.
Innovation Solution
A centralized software system registers digital wallets, generates and verifies transactions, and broadcasts them to the blockchain network, allowing for batch processing and fee sharing among wallets, while maintaining communication paths and reliability rankings for efficient and cost-effective transaction management.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If small entities send individual UTXO transactions without batching, then transaction speed and simplicity are maintained, but transaction costs become prohibitively high
Solution Approach 1:
The patent combines multiple individual UTXO transactions from different small entities into a single batched transaction. The system aggregates transactions that would individually be inefficient, merging them into one transaction that achieves economies of scale, reducing the cost per transaction while maintaining simplicity for individual users.
Solution Approach 2:
The patent creates a universal batch processing system that serves multiple small entities simultaneously. The same batching infrastructure that serves large entities is made available to small entities, allowing them to benefit from the same cost-efficient transaction processing without needing to implement their own batching systems.
2Productivity
If small entities delay transactions to accumulate sufficient outputs for batching, then transaction cost per output decreases, but transaction speed and responsiveness deteriorate
Solution Approach 1:
The system performs preliminary actions by pre-aggregating transaction requests from multiple small entities into a batch. Instead of waiting for individual entities to accumulate sufficient outputs, the system proactively collects and combines transactions, allowing them to be processed together at optimal efficiency without delaying individual transaction needs.
Solution Approach 2:
The patent introduces a batching system as an intermediary between small entities and the blockchain network. This intermediary aggregates transactions from multiple entities, manages the batching process, and submits the combined transaction, thereby enabling small entities to achieve low cost-per-output without needing to delay or accumulate outputs themselves.
3Productivity
If UTXOs are merged into a single batched transaction, then transaction cost efficiency improves, but privacy is significantly reduced due to transaction correlation
Solution Approach 1:
The patent segments the batched transaction into multiple output destinations, each corresponding to a different entity. By dividing the transaction outputs and assigning them to different destinations, the system maintains cost efficiency through batching while reducing the ability to correlate transactions and infer private information about individual entities.
Solution Approach 2:
The system applies different quality characteristics to different parts of the batched transaction. Each output destination receives tailored transaction data specific to that entity, while the overall batch structure provides cost efficiency. This local differentiation in transaction structure helps preserve privacy by making it harder to correlate transactions across entities while maintaining batching benefits.
Data Source
AI summary
Systems and methods describe providing batch processing of blockchain-based cryptocurrency transactions. First, the system receives or derives a number of public keys each associated with a digital wallet for cryptocurrency, then maintains a communication path to each digital wallet using the public keys. The system receives a transaction request from each digital wallet, then generates a transaction containing transaction details for each digital wallet. A request is sent to each digital wallet in the transaction to verify the transaction details for that digital wallet, and signature are received from each digital wallet based on the request to verify the transaction details for that digital wallet. Upon receiving signatures from each of the digital wallets, the system broadcasts the transaction at a blockchain network.