Blockchain Transaction Authorization Using Work Requirement Verification
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Solution Overview
Problem
Existing blockchain systems lack efficient mechanisms to authorize transactions based on user participation and token requirements, particularly for utility tokens, which are not subject to federal securities regulations, leading to potential misuse and regulatory challenges.
Innovation Solution
A system and method for authorizing blockchain network transactions using nodes that determine user or token satisfaction of work requirements through smart contracts, digital wallets, and attestation data, including anti-money laundering and know your customer checks, to approve or disapprove transactions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If traditional blockchain validation mechanisms are used, then transaction validation can be performed, but the system lacks efficient authorization based on user or token participation and cannot effectively manage utility tokens
Solution Approach 1:
The validation process is segmented into multiple independent components: work requirement determination module, token balance verification module, transaction validation module, and authorization module. Each component performs a specific function, allowing the system to handle complex authorization scenarios for utility tokens through modular processing rather than a monolithic complex system.
Solution Approach 2:
The patent introduces intermediary structures including the Clearinghouse architecture and smart contract frameworks that mediate between users, nodes, and the blockchain ledger. These intermediaries manage the complex interactions required for utility token authorization, work requirement verification, and transaction validation, simplifying the overall system architecture while enhancing authorization capabilities.
2Productivity
If blockchain networks process transactions manually through node validation, then transaction integrity can be maintained, but scalability and transaction throughput are limited
Solution Approach 1:
The system performs preliminary actions by pre-verifying work requirements and token balances before transaction validation. The work requirement determination is assessed in advance, and token balances are pre-verified through the clearinghouse architecture, allowing transactions to be processed more quickly while maintaining validation reliability through pre-established verification protocols.
Solution Approach 2:
The patent replaces manual mechanical validation processes with automated smart contract-based verification mechanisms. Smart contracts automatically execute validation logic, work requirement determination, and authorization procedures, eliminating the need for manual node-by-node validation and significantly increasing transaction throughput while maintaining reliability through programmable verification.
3Ease of manufacture
If utility tokens are issued without regulatory compliance mechanisms, then token distribution can be simplified, but regulatory compliance and legal requirements cannot be satisfied
Solution Approach 1:
The Clearinghouse architecture provides universal functionality that handles both token distribution and regulatory compliance within a single integrated system. The same platform verifies work requirements, checks token balances, ensures regulatory compliance, and facilitates transaction validation, eliminating the need for separate compliance mechanisms while maintaining distribution simplicity.
Solution Approach 2:
The system implements feedback mechanisms where the Clearinghouse continuously monitors token distributions, work requirement satisfactions, and transaction validations against regulatory criteria. This feedback loop ensures compliance is maintained automatically throughout the token lifecycle, allowing simplified distribution processes to remain compliant through ongoing verification and adjustment.
4Reliability
If nodes perform comprehensive validation work for each transaction, then transaction security can be ensured, but network latency and processing time increase
Solution Approach 1:
Validation work is segmented and distributed across multiple specialized modules: work requirement determination, token balance verification, and transaction validation. Each module handles specific validation tasks independently, allowing parallel processing and reducing the time required for comprehensive validation while maintaining security through distributed verification.
Solution Approach 2:
The system performs preliminary validation actions through the Clearinghouse architecture that pre-verifies work requirements and token balances before final transaction validation. This preliminary action reduces the processing time for subsequent validation steps while maintaining security through layered verification protocols.
Data Source
AI summary
Systems and methods are provided that authorize blockchain network transactions based on a work requirement. A blockchain network has a plurality of nodes. At least one node of the plurality of nodes is configured to determine whether a token has satisfied a work requirement. The work requirement represents participation of performing work within the blockchain network. The at least one node is further configured to approve a transaction as a function of determining that the work requirement has been satisfied and, to disapprove the transaction as a function of determining that the work requirement has not been satisfied. By enabling the transaction to be approved based on a work requirement, the token, for example, can be authenticated as having an inherent functional value. In this way, the blockchain network or token exchange can attest to the token not being a security, which would be subject to federal securities and regulations.