Blockchain Token Exchange Using Incomplete Transactions for Anonymous Transfer
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Solution Overview
Problem
Current blockchain systems require an additional off-chain database to manage public key information for tokenized assets, leading to complexity and the risk of databases becoming out of sync, and lack the ability to securely and automatically transfer assets to anonymous parties while maintaining privacy.
Innovation Solution
A method and system that utilizes the Bitcoin blockchain to generate incomplete transactions with modifiable outputs, allowing only the asset controller to specify the recipient, and embeds notification addresses within transaction scripts for secure, automated transfers and communications.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If a traditional centralized registry is used to track ownership of tokenized assets, then ownership control and tracking are achievable, but the system requires knowledge of party identities and introduces centralization points that are vulnerable to hacking and regulatory scrutiny
Solution Approach 1:
The patent extracts the ownership control functionality from the centralized registry and relocates it to the blockchain layer through cryptographic mechanisms. Specifically, the redeem script hash and locking mechanisms are embedded directly in the blockchain transaction structure, allowing ownership control to be performed decentralized while maintaining reliability. This eliminates the need for a separate centralized ownership registry.
2Loss of information
If transaction details including party identities are recorded on the blockchain, then transparency and auditability are improved, but privacy and security of the parties are compromised
Solution Approach 1:
The patent introduces cryptographic hash values as intermediaries between the actual transaction details and the blockchain record. Instead of storing party identities directly, the system stores hashed representations (e.g., redeem script hashes, public keys) that serve as mediators. These intermediaries preserve transaction transparency and auditability while protecting the actual identity information from direct exposure on the blockchain.
Solution Approach 2:
The patent uses cryptographic copies (hashes) of the original transaction data instead of storing the actual sensitive information. The redeem script hash is a cryptographic copy that allows verification of ownership and transaction validity without revealing the underlying private keys or identity information. This copying mechanism maintains transparency while preventing direct access to sensitive data.
3Adaptability or versatility
If the asset controller wants to redirect income payments dynamically, then flexibility and adaptability are improved, but the transaction process requires additional control mechanisms that may complicate the system
Solution Approach 1:
The patent implements dynamic payment redirection through the use of unlock scripts that can be updated by the asset controller. The redeem script associated with the tokenized asset can be modified to change the recipient's public key, allowing the controller to redirect future payments to different destinations. This dynamic mechanism is built into the blockchain transaction structure, enabling flexible payment redirection without requiring complex external control systems.
Data Source
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AI summary
The invention provides a method and corresponding system for controlling the generation of a blockchain transaction, and/or the recipient of a transaction output. It can also be used to control and record the ownership of an asset represented on the blockchain without the need for a separate registry of ownership. The ownership and transfers thereof can be handled and recorded without the need for knowledge of the parties involved or their identities. According to one embodiment, the method comprises the steps of identifying at least one transaction (Tx) on a blockchain which comprises: an unspent transaction output (UTXO) relating to a tokenised asset associated with an asset controller; and an input which spends an output from a previous transaction that is locked by a redeem script hash. For each identified transaction (Tx), an incomplete blockchain transaction is generated comprising: a first output comprising a copy of the redeem script hash; and a second output which is modifiable such that only the asset controller is able to specify a recipient for the second output. The incomplete blockchain transaction is communicated to the controller of the asset. the incomplete blockchain transaction is incomplete in that it is missing a required cryptographic signature. Thus, payment of income relating to the asset can be redirected by the controller to a destination of their choice.