Blockchain Transaction Authorization With Smart Contracts
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Solution Overview
Problem
Payment networks face high costs and limitations due to traditional payment models, including costly secure protocols and infrastructure, which result in high fees for merchants and additional expenses for maintaining transaction contracts and security measures.
Innovation Solution
A transaction authorization process using blockchain technology that involves smart contracts to automate and secure transactions, reducing the need for traditional payment network infrastructure by utilizing a distributed ledger for transaction authorization and contract management.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional payment network infrastructure and secure protocols are implemented, then transaction security and authorization are ensured, but network costs and infrastructure expenses increase significantly
Solution Approach 1:
The patent replaces traditional centralized payment network infrastructure with a blockchain-based distributed ledger system. The mechanical system of centralized servers, secure protocols, and infrastructure is substituted with a decentralized cryptographic system using public-private key pairs, smart contracts, and distributed consensus mechanisms. This substitution maintains transaction security while eliminating the need for expensive centralized infrastructure.
2Productivity
If traditional payment network infrastructure is used, then transaction processing capability is provided, but infrastructure complexity and maintenance costs increase
Solution Approach 1:
The blockchain system enables self-service transaction processing through smart contracts that automatically execute agreed-upon terms without requiring centralized infrastructure management. The network participants independently validate and process transactions using their own computing resources, eliminating the need for complex centralized infrastructure maintenance while maintaining transaction processing capability.
3Reliability
If centralized secure protocols are implemented, then transaction authorization is ensured, but fees charged to merchants increase
Solution Approach 1:
The patent introduces smart contracts as intermediary automated agreement systems that replace centralized authorization protocols. These smart contracts serve as mediators between trading parties, automatically enforcing agreed-upon terms and conditions without requiring expensive centralized authorization infrastructure. The intermediary function is performed by decentralized code rather than costly centralized services.
4Loss of information
If additional payment contracts are stored and maintained, then contractual agreements are preserved, but storage and security costs increase
Solution Approach 1:
The blockchain ledger serves multiple functions simultaneously: it stores transaction data, maintains contractual agreements through smart contracts, provides security through cryptographic mechanisms, and enables decentralized validation. This multi-functional system replaces separate infrastructure components for storage, security, and contract management, reducing overall costs while preserving all contractual information.
Data Source
AI summary
Systems and methods for transaction authorizations using a distributed database are disclosed. The system may allow registered transaction account holders and merchants to interact and complete transactions according to workflows enforced by smart contracts. The system may include an issuer system that receives a transaction authorization request comprising a merchant ID, a transaction account number, a transaction amount, and a transaction ID. The issuer system may retrieve a merchant public key and a smart contract based on the merchant ID, and a user public key based on the transaction account number. The issuer system may invoke the smart contract by passing the user public key and the transaction ID to the smart contract. The system may propagate transaction data (e.g., the merchant ID, the transaction account number, the payment amount, a transaction status, etc.) to a blockchain network for writing to a blockchain according to the invoked smart contract.