Blockchain Transaction Authorization With Real-Time Due Diligence
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Solution Overview
Problem
Existing blockchain transaction systems lack efficient mechanisms for real-time due diligence and compliance verification among multiple parties, leading to potential fraudulent transactions and increased computational costs.
Innovation Solution
A method for multi-party blockchain transaction authorization that involves characterizing compliance states and risk profiles of agents based on policies and transaction characteristics, enabling real-time due diligence and authorization through a computer system that manages and shares compliance and risk information among agents.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional blockchain transaction systems are used without real-time due diligence mechanisms, then transaction processing is simpler and faster, but security is compromised and fraudulent transactions increase
Solution Approach 1:
The system performs due diligence and compliance verification in advance of the actual transaction execution. Risk profiles and compliance states of all participating agents are characterized beforehand, and authorization decisions are made based on these pre-assessed parameters, preventing fraudulent transactions before they occur while maintaining system security
Solution Approach 2:
The patent introduces an intermediary authorization layer between transaction initiation and execution. This intermediary system evaluates compliance states and risk profiles, and only authorizes transactions that meet predetermined criteria, thereby enhancing security without requiring fundamental changes to the underlying blockchain infrastructure
2Reliability
If comprehensive due diligence and compliance verification are performed for all transactions, then security is improved, but computational costs and processing time increase
Solution Approach 1:
Risk profiles and compliance states are characterized in advance and cached for quick reference. When a transaction is initiated, the system checks these pre-computed parameters rather than performing full due diligence anew, significantly reducing processing time while maintaining verification accuracy
Solution Approach 2:
The system transitions from performing comprehensive continuous verification to checking specific pre-determined parameters (risk profile thresholds, compliance state flags). This parameter-based approach maintains security requirements while dramatically reducing the computational burden and processing time for each transaction
3Object-affected harmful factors
If real-time due diligence is implemented for all agents, then fraudulent activities are reduced, but computational resources are consumed
Solution Approach 1:
The system performs due diligence selectively rather than universally. It focuses verification efforts on transactions or agents that meet certain risk criteria, while allowing low-risk transactions to proceed with minimal verification. This partial application of due diligence maintains security against fraud while conserving computational resources
Solution Approach 2:
The system uses risk profile parameters to dynamically adjust the level of verification required. Transactions involving agents with favorable risk profiles and compliance states undergo streamlined verification, while those with higher risk parameters trigger more comprehensive checks, optimizing resource allocation based on actual risk levels
4Reliability
If multiple parties perform independent compliance checks, then security is enhanced, but network efficiency decreases due to redundant verification
Solution Approach 1:
The patent combines compliance verification and risk assessment functions into a unified authorization mechanism. Multiple parties share and recognize each other's compliance states and risk profiles, eliminating redundant verification efforts while maintaining the security benefits of multi-party authorization through coordinated validation
Data Source
AI summary
A method includes: receiving a first message from a first agent, the first message comprising a request to transfer a virtual asset to a recipient identifier, associated with a second agent, from a sender identifier associated with a sender blockchain address; for the first agent, accessing a set of policies and a set of transaction characteristics of transactions associated with the first agent; characterizing a compliance state and a risk profile of the first agent based on the set of policies and the set of transaction characteristics; transmitting a second message to the second agent, the second message including the compliance state of the first agent and the risk profile of the first agent; receiving confirmation from the second agent to proceed with transfer based on the first compliance state and the first risk profile; and releasing a recipient blockchain address associated with the recipient identifier to the first agent.