Bilateral Assertion Model for Real-Time Financial Ledger Reconciliation
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Solution Overview
Problem
Current financial instrument trading systems and databases face challenges with data integrity, confidentiality, and latency due to their centralized nature and lack of cryptographic security, leading to issues in tracking transactions and maintaining accurate records, especially in scenarios involving multiple parties and complex financial agreements.
Innovation Solution
The implementation of a bilateral assertion model (BAM) using a bilateral distributed ledger (BDL) that enables bilateral transactions to be recorded as assertions, ensuring immutability, irrefutability, confidentiality, recoverability, atomicity, and durability, allowing for real-time reconciliation and validation among participants without the need for centralized control.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If a centralized database or ledger is used to store transaction data, then data access and modification are simplified, but data integrity and security are compromised due to lack of cryptographic protection
Solution Approach 1:
The patent introduces a cryptographic intermediary layer that mediates between the centralized ledger and access requests. Digital signatures and hash functions act as intermediaries to verify data integrity without requiring complex trust relationships between parties. This allows the system to maintain centralized simplicity while achieving distributed security properties.
Solution Approach 2:
The patent transforms the security parameters of the ledger system by applying cryptographic transformations. Data is hashed and signed, changing its mathematical properties to provide tamper-evident storage. This allows the same centralized database structure to achieve integrity guarantees previously only available in distributed systems.
2Reliability
If all transactions are recorded transparently in a replicated ledger like blockchain, then transaction tracking and reliability are improved, but confidentiality of transactions is lost
Solution Approach 1:
The patent segments transaction data into public and private components. Transaction metadata (hashes, timestamps, parties involved) is recorded transparently in the replicated ledger for tracking, while sensitive transaction details remain confidential. This segmentation allows simultaneous achievement of transparency for verification and confidentiality for private information.
Solution Approach 2:
Different portions of the ledger have different quality characteristics. The patent implements a structure where certain fields (hashes, signatures, timestamps) are publicly visible for verification, while other fields (transaction amounts, private keys, sensitive data) are locally protected. This local differentiation of transparency and confidentiality resolves the contradiction.
3Ease of operation
If multiple parties maintain separate copies of the ledger, then data access and autonomy are improved, but reconciliation complexity and time consumption increase
Solution Approach 1:
The patent applies preliminary cryptographic actions to data before it is distributed to multiple parties. Hashes and digital signatures are computed in advance, allowing each party to independently verify the authenticity and integrity of ledger copies without requiring time-consuming reconciliation processes. The verification is built into the data structure itself.
Solution Approach 2:
The patent implements cryptographic feedback mechanisms where each ledger copy contains verification data (hashes, signatures) that provide immediate feedback on data integrity. When parties compare their ledger copies, the cryptographic feedback allows rapid identification of discrepancies without manual reconciliation, dramatically reducing the time required.
4Reliability
If cryptographic security measures are implemented to protect transactions, then security and reliability are improved, but system complexity and processing overhead increase
Solution Approach 1:
The patent extracts cryptographic security functions into separate, standardized components that can be independently implemented and verified. Digital signature verification, hash computation, and encryption/decryption are separated as distinct operations. This modularity reduces overall system complexity by allowing each cryptographic component to be optimized and maintained independently.
Data Source
AI summary
A computer implemented method for implementing a real time reconciling shared data structure is disclosed. The shared data structure may be stored in a memory, and a portion of the shared data structure may be coupled with a processor. The computer implemented method may be used for interacting with the shared data structure. The method may comprise the exchange of messages, requesting to change data in the shared data structure, between selected participants, wherein some of the participants must validate requested changes to the shared data. If all participants validate the requests to change data the changes to the data are made, and if less than all participants validate the requests then the changes are not made.