Blockchain Smart Contract Escrow for Secure Transaction Conditions
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Solution Overview
Problem
Existing transaction systems face challenges in ensuring that the recipient of funds provides the expected product or service, as fraudulent intentions or unsatisfactory delivery can result in the sender losing their funds without receiving the intended goods or services.
Innovation Solution
A method utilizing a smart contract and blockchain technology to facilitate secure transactions, where a sender and receiver agree on a condition for the transaction, and the smart contract is hashed and incorporated into a blockchain, ensuring that the transaction is only finalized once the condition is met.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If funds are placed in escrow to protect the sender, then the sender's security is improved, but the receiver cannot use the funds before the condition is fulfilled
Solution Approach 1:
The patent introduces a blockchain-based smart contract as an intermediary that holds the sender's funds and conditions without completely restricting the receiver. The receiver can create spending requests that are recorded on the blockchain, allowing limited use of funds while the smart contract maintains overall control until conditions are met.
Solution Approach 2:
The patent segments the escrow function into multiple components: the smart contract holds the actual funds, the blockchain records spending requests and conditions, and the receiver can submit spending requests for approval. This segmentation allows the receiver to initiate transactions while the smart contract maintains security oversight.
2Adaptability or versatility
If the receiver can use funds before the condition is met, then the receiver's flexibility is improved, but the sender's security deteriorates
Solution Approach 1:
The patent creates a dynamic system where the receiver's ability to spend funds evolves based on smart contract conditions. Initially, the receiver can submit spending requests with limited approval. As conditions are met and the smart contract state changes, the receiver gains increased spending authority, allowing flexibility to improve dynamically without compromising initial security.
Solution Approach 2:
The smart contract continuously monitors conditions and provides feedback by automatically approving or rejecting spending requests based on whether conditions are satisfied. This feedback mechanism allows the receiver to use funds when conditions permit while maintaining sender protection when conditions are not yet met.
3Reliability
If traditional escrow is used to prevent fraud, then transaction security is improved, but transaction speed and reversibility deteriorate
Solution Approach 1:
The patent replaces traditional mechanical escrow systems with automated blockchain smart contracts. The smart contract automatically executes fund transfers and reversals based on predefined conditions without requiring manual intervention from escrow agents, dramatically reducing transaction finality time while maintaining security through cryptographic enforcement.
Solution Approach 2:
The smart contract autonomously manages the escrow process, automatically approving spending requests when conditions are met and reversing transactions when conditions fail. This self-service capability eliminates delays associated with manual escrow management while maintaining robust security through automated condition verification.
Data Source
AI summary
A method is disclosed. The method includes receiving a first interaction request to transfer a first interaction amount from a sender to a receiver. The first interaction request comprise a sender identifier, a receiver identifier, the first interaction amount, and a condition. The computer generates a smart contract this information, and then hashes the to form a first hash key. The computer incorporates the information, and the first hash key into a first block in a blockchain. The computer receives a second interaction request from the receiver device to transferring a second amount from the receiver to a third party, the second interaction request comprising the receiver identifier, a second interaction amount, and a third party identifier. The computer hashes this information to form a second hash key. The server computer incorporates this information and the second hash key into a second block in the blockchain.