Cross-DLT Currency Locking to Prevent Double Spending
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Solution Overview
Problem
Existing DLT networks face challenges in communicating and preventing double-spending of digital currency due to incompatible communication protocols and the inability of nodes to verify transactions across different networks.
Innovation Solution
An exchange node creates mirrored digital currencies on multiple DLT networks based on a common collateral, monitors transaction requests, and locks the digital currency on the originating network to prevent double-spending by ensuring the transaction is confirmed or denied on the destination network.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If digital currency is transferred between multiple DLT networks, then cross-network transaction capability is improved, but double-spending risk increases
Solution Approach 1:
The system performs preliminary locking of the first digital currency on the first DLT network before the transfer transaction is completed. This preliminary action prevents the currency from being spent again on either network, resolving the double-spending risk that would otherwise exist when enabling cross-network transfers
Solution Approach 2:
The system introduces an intermediary locking mechanism that mediates between the first DLT network and the second DLT network. This intermediary lock ensures that when digital currency is transferred between networks, the original currency is held hostage until the transfer is confirmed, preventing double-spending while maintaining cross-network capability
2Reliability
If digital currency is locked on the originating network to prevent double-spending, then transaction integrity is improved, but transaction speed decreases
Solution Approach 1:
The locking mechanism is dynamic rather than static. The lock is temporarily applied only for the duration needed to verify the transfer transaction, and is automatically released once verification is complete. This dynamic approach maintains transaction integrity while minimizing the time the currency is locked, thus preserving transaction speed
3Adaptability or versatility
If mirrored digital currencies are created on multiple DLT networks, then cross-network compatibility is improved, but system complexity increases
Solution Approach 1:
The system creates mirrored copies of digital currency on different DLT networks, where each mirror represents the same underlying value. This copying approach enables cross-network compatibility without requiring complex inter-network communication protocols, as each network independently validates its own copy while the locking mechanism ensures consistency across all copies
Data Source
AI summary
A system and method for preventing the double-spending of digital currency that transfers between multiple DLT networks. The system and method includes creating a first digital currency of a first type on the first DLT network stored in a digital wallet, the first digital currency associated with a second digital currency of a second type on a second DLT network, configuring a monitoring agent on the node, the monitoring agent configured to intercept at least one of a function call, a message, or an event on the digital wallet, and locking, responsive to intercepting the at least one of the function call, the message, or the event, the first digital currency onto the first DLT network to prevent a transfer of the first digital currency from the digital wallet on the first DLT network to another DLT network responsive to a subsequent transaction request.