Blockchain Gateway for Transaction Control and Fraud Prevention
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Solution Overview
Problem
Current online transaction systems struggle to effectively control initial sales and resales, allowing bulk purchasers to create secondary markets that drive up prices, leading to fraud and loss of control for primary market sellers.
Innovation Solution
The implementation of an electronic, online closed loop blockchain gateway and transactional exchange system, which uses hardware processors to forge genesis and child blocks, enabling merchants to control the sale and resale of products by assigning exchange limits and verifying user identities through cryptographic tokens.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If bulk purchasers use automated bots to rapidly purchase products, then they can acquire large quantities of goods quickly, but the seller loses control over supply and pricing
Solution Approach 1:
The system performs preliminary actions by requiring user registration and authentication before purchases can be made. Exchange limits are pre-configured in the system, and the blockchain gateway is pre-established to track all transactions. This preliminary setup prevents bulk purchasers from rapidly acquiring large quantities without seller oversight, as each transaction must be verified against pre-set limits.
2Ease of operation
If sellers require user authentication and registration, then they can control and track purchases, but the transaction process becomes more complex and time-consuming
Solution Approach 1:
The blockchain gateway acts as an intermediary between sellers and buyers, automating the verification and tracking processes. Instead of requiring complex manual authentication systems, the gateway automatically verifies user identities, checks exchange limits, and records transactions on the blockchain. This intermediary handles the complexity behind the scenes while maintaining seller control.
3Ease of operation
If exchange limits are imposed on purchases, then sellers can prevent bulk purchasing and price manipulation, but legitimate buyers may be restricted from purchasing reasonable quantities
Solution Approach 1:
The system implements dynamic exchange limits that are tied to individual user identities and purchase histories. Rather than imposing static restrictions, the blockchain gateway continuously monitors and adjusts allowable purchase quantities based on each user's legitimate needs and past behavior. This dynamic approach allows reasonable flexibility for genuine buyers while preventing abuse by bulk purchasers.
4Productivity
If secondary markets are allowed to operate freely, then price discovery occurs, but fraud and counterfeit goods increase
Solution Approach 1:
The blockchain gateway establishes a feedback mechanism that continuously tracks product provenance from original purchase through any subsequent resales. Each transaction is recorded on the blockchain, creating an immutable history that can be verified by all parties. This feedback loop enables the system to detect and prevent counterfeit goods while maintaining legitimate secondary market operations, as each product's journey can be traced back to its authentic source.
Data Source
AI summary
Exemplary embodiments described herein include a closed loop gateway. The closed-loop gateway comprises a block chain system for tracking exchanges between users of the closed-loop gateway. The closed-loop gateway permits the exchanges to be tracked from an original source through subsequent users to permit the original source to impose conditions, restrictions, and rules on the subsequent exchanges.