Crypto Exchange Authentication Using Issuer-Verified Account Data
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Solution Overview
Problem
Conventional user authentication protocols for cryptocurrency exchanges are cumbersome and time-consuming, often requiring sensitive information and inhibiting mass adoption due to perceived invasiveness, especially with increasing governmental regulation.
Innovation Solution
A payment network system that rapidly authenticates users for trading on cryptocurrency exchanges by utilizing an API to communicate with an issuer system, receiving verification results based on previously authenticated user information, and transmitting these results to the exchange, thereby streamlining the onboarding process.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If conventional user authentication protocols are used for cryptocurrency exchanges, then security and verification accuracy are improved, but authentication time and process complexity increase
Solution Approach 1:
The issuer system performs user verification in advance by checking user information against previously authenticated data stored in its database. This preliminary verification action allows the payment network to quickly confirm user identity without requiring the user to undergo time-consuming authentication procedures at the cryptocurrency exchange, thus reducing authentication time while maintaining security standards.
Solution Approach 2:
The payment network acts as an intermediary between the user and the cryptocurrency exchange. Instead of the exchange directly performing complex authentication, the payment network mediates the process by leveraging the issuer system's pre-authenticated user data. This intermediary approach streamlines the authentication flow, reducing both time and complexity for the end user while preserving security through trusted third-party verification.
2Measurement precision
If conventional user authentication protocols are used for cryptocurrency exchanges, then verification accuracy is improved, but process complexity and user burden increase
Solution Approach 1:
The complex verification process is extracted from the cryptocurrency exchange environment and relocated to the issuer system. The issuer system handles the burden of verifying user information against its database of previously authenticated data, while the payment network simply transmits the verification result. This extraction reduces the authentication process complexity at the exchange while maintaining verification accuracy through the issuer system's established verification capabilities.
Solution Approach 2:
The payment network utilizes copies of user information that have already been authenticated and stored in the issuer system's database. Instead of requiring users to provide original documentation or undergo repeated verification, the system uses authenticated data copies for the cryptocurrency exchange onboarding process. This copying approach maintains verification accuracy while significantly reducing process complexity and user burden.
3Reliability
If traditional KYC processes are used for cryptocurrency exchanges, then regulatory compliance is improved, but user experience and adoption rate worsen
Solution Approach 1:
The issuer system performs regulatory-compliant verification of user information in advance, before the user attempts to access the cryptocurrency exchange. By completing the KYC-like verification process beforehand using the issuer system's authenticated user data, the actual onboarding process at the exchange becomes rapid and seamless. This preliminary action maintains regulatory compliance requirements while dramatically improving user experience by eliminating cumbersome authentication steps.
Solution Approach 2:
Users leverage their existing authenticated information with the issuer system to automatically satisfy cryptocurrency exchange verification requirements. The system enables self-service authentication where the user's previously verified identity information is automatically utilized without requiring them to manually submit documents or undergo repeated compliance checks. This self-service approach maintains regulatory compliance through trusted verification while significantly enhancing ease of operation and user experience.
Data Source
AI summary
A method of rapidly onboarding a user for access to trade on a cryptocurrency exchange via a payment network is disclosed herein. The method can include receiving an application program interface (“API”) call including a request to authenticate the user for access to trade on the cryptocurrency exchange, wherein the request includes information associated with an account of the user, transmitting the request to an issuer system associated with the account, receiving a verification result from the issuer system, wherein the verification result is based on user identifying information previously authenticated by the issuer system in association with the account, wherein the verification result is indicative of an authenticity status of the user, and responding to the request by transmitting an indication of the verification result to the cryptocurrency exchange.