Blockchain Payment Settlement Using Private Public Ledger Hashing
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Solution Overview
Problem
Current payment systems in banking institutions require daily settlement processes, are prone to errors, and resource-intensive for correcting errors, and face challenges with forgery and illegal copying due to hacking, especially in managing transactions between central banks and private sector institutions.
Innovation Solution
A method using blockchain technology to issue and settle cryptocurrencies by employing hash functions and cryptography, ensuring transaction validity through unique nonces, public keys, and signature values, and maintaining balance databases within private and public blockchain networks to prevent forgery and duplicate payments.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If traditional payment systems are used for settling payments between central banks and banking institutions, then the payment process can be completed, but it requires daily settlement procedures which are time-consuming and resource-intensive
Solution Approach 1:
The patent creates a digital copy of the payment settlement system using blockchain technology. Instead of physical money transfer and manual reconciliation, the system uses cryptographic tokens and distributed ledger to replicate the settlement function, enabling real-time finality without daily batch processing
Solution Approach 2:
The patent replaces the mechanical settlement process (physical money movement, manual accounting) with an electronic/cryptographic system. Blockchain's immutable ledger and smart contracts substitute the traditional mechanical reconciliation process, achieving automatic settlement without human intervention
2Productivity
If traditional payment systems are used, then payments can be processed, but errors in processing huge payment data require much resources for correction
Solution Approach 1:
The patent performs validation checks before finalizing transactions. Smart contracts verify payment data integrity, account balances, and authorization credentials prior to execution, preventing erroneous transactions from being processed and eliminating the need for costly post-processing corrections
Solution Approach 2:
The blockchain system provides immediate feedback on transaction validity through its consensus mechanism. Each node validates transactions against the ledger state, and invalid transactions are rejected instantly, creating a self-correcting system that prevents error propagation
3Productivity
If traditional payment systems are used, then transactions can be recorded, but illegal copying or forgery of recorded data caused by hacking requires much resources for corrections
Solution Approach 1:
The patent uses identical cryptographic hash functions across all nodes in the distributed network. Each node independently computes the same hash values for transaction validation, ensuring consistent security verification and preventing forged transactions from being accepted by any single node
Solution Approach 2:
The patent combines multiple cryptographic techniques (hash functions, digital signatures, nonces) to create a composite security mechanism. This layered approach to security, where multiple independent cryptographic primitives work together, provides robust protection against various types of attacks including forgery and hacking
4Reliability
If blockchain technology with hash functions and cryptography is used, then security against forgery and illegal copying is improved, but the system complexity increases
Solution Approach 1:
The patent divides the blockchain system into distinct functional modules: transaction generation, hashing, digital signing, validation, and consensus. Each module performs a specific cryptographic function, making the overall complex system manageable through clear separation of concerns and independent verification of each component
Data Source
AI summary
Provided in the present invention is a method comprising steps of: (a) confirming validity of a currency issuing transaction and a currency issuer when the currency issuing transaction including (i) a specific unique nonce, (ii) a receiver of the currency, (iii) issued amount of the currency, (iv) a public key of the currency issuer, and (v) a signature value of the currency issuer signing the (i), (ii), (iii), and (iv) with a private key of the currency issuer is obtained, and if valid, registering the currency issuing transaction on a private BCDB, wherein registering includes updating a balance database by referencing amount of change in balance due to the issued amount of the currency, included in the currency issuing transaction; and (b) registering, on the public BCDB, a specific representative hash value generated by calculating an associated hash value matching the specific hash value, when a specific condition is satisfied.