Blockchain Coupon Validation for Fraud-Resistant Redemption
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Solution Overview
Problem
Fraud and error in coupon redemption cost hundreds of millions of dollars annually, exacerbating the strained business relationships between brand manufacturers and retailers due to fraudulent activity and invalid claims, particularly in mobile networks facilitating electronic dissemination of offers and financial data.
Innovation Solution
A centralized and decentralized network system utilizing blockchain technology to manage and record each stage of the coupon transaction, ensuring efficient communication with a blockchain host to reduce fraud and maintain low latency, with features like barcode scanning and private key validation for redemption.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional centralized coupon validation systems are used, then system complexity is reduced, but fraud vulnerability increases and reliability decreases
Solution Approach 1:
The patent introduces a blockchain network as an intermediary layer between coupon issuers and validators. This decentralized ledger acts as a neutral mediator that records coupon creation, distribution, and redemption transactions immutably, eliminating the need for trusted centralized authorities while preventing fraud through cryptographic verification of each transaction step.
Solution Approach 2:
The system segments coupon validation into distinct blockchain transactions: coupon creation transactions, distribution transactions, and redemption transactions. Each segment is independently verified and recorded on the blockchain, allowing parallel processing while maintaining overall system integrity and reducing single-point failure risks.
2Reliability
If blockchain technology is implemented for coupon validation, then fraud mitigation improves, but processing time increases
Solution Approach 1:
The system performs preliminary actions by pre-generating cryptographic signatures and validation data when coupons are created and distributed. This upfront preparation allows validators to quickly verify coupon authenticity using pre-computed cryptographic proofs, eliminating the need for complex real-time verification and reducing validation processing time.
Solution Approach 2:
The patent replaces traditional mechanical validation systems (centralized databases, sequential authorization chains) with cryptographic verification mechanisms. Blockchain's consensus algorithms and digital signature schemes enable parallel validation of multiple coupons simultaneously, dramatically reducing processing time compared to sequential centralized approval processes.
3Object-affected harmful factors
If decentralized blockchain network is used, then fraud resistance improves, but communication latency increases
Solution Approach 1:
The patent implements local quality by allowing validators to perform independent cryptographic verification of coupon transactions using locally stored validation rules and pre-distributed public keys. This eliminates the need for continuous communication with central authorities, reducing latency while maintaining fraud resistance through distributed verification capabilities at each node.
Data Source
AI summary
A method for preventing fraud is provided that includes receiving metadata from a manufacturer for an incentive associated with a product, the metadata including a product identifier and a redemption rule. The method includes requesting a host to create a record in a ledger for the incentive using the metadata, providing the incentive to a consumer via a mobile device, assigning a public address to the incentive, receiving from the host a first private key associated with the public address in the record, providing the first private key to the consumer, and receiving a second private key indicative of a redemption of the incentive at a retailer. The method includes validating redemption of the incentive and recording the redemption of the incentive at a retailer in the ledger record when the redemption of the incentive is validated. A system to perform the above method is also provided.