Crypto Currency Chargeback System for Dispute Resolution
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Solution Overview
Problem
Distributed cryptocurrencies lack a mechanism for reversing transactions, placing transaction risk solely on the payer, which hinders their adoption in commercial transactions due to the inability to address disputes or issues with goods or services not received.
Innovation Solution
A chargeback system is introduced that allows for the reporting, recording, and publishing of chargeback requests within a distributed crypto currency system, enabling payers to express dissatisfaction, payees to address issues, and third parties to provide insurance for transactions, thereby reducing risk for payers.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of energy
If distributed crypto currencies are used for transactions, then transaction costs are reduced and decentralization is achieved, but transaction risk is placed entirely on the payer with no recourse for disputes
Solution Approach 1:
The patent introduces a chargeback system that acts as an intermediary mechanism between payer and payee. When a dispute arises, the payer can initiate a chargeback request, and a neutral third party (the chargeback system) mediates the dispute resolution process by reviewing evidence from both parties and making a determination. This mediator resolves the contradiction by providing dispute resolution without requiring a central authority, maintaining decentralization while reducing transaction risk.
Solution Approach 2:
The chargeback system performs preliminary actions by establishing a dispute resolution mechanism before transactions are completed. The system pre-defines the rules and processes for chargebacks, allowing payers to have recourse if disputes arise. This preliminary setup of resolution protocols reduces transaction risk upfront while maintaining the decentralized nature of crypto currency transactions.
2Speed
If crypto currency transfers are made non-reversible, then transaction finality and speed are improved, but payers have no recourse if goods or services are not delivered
Solution Approach 1:
The patent segments the transaction process into distinct phases: the initial crypto currency transfer phase (which remains fast and final) and the dispute resolution phase (which activates only if needed). The chargeback system operates as a separate layer that doesn't interfere with the speed of the original transaction but provides recourse when disputes arise. This segmentation maintains transaction finality while adding payer protection.
Solution Approach 2:
The system dynamically adjusts the reversibility of transactions based on conditions. Normally, crypto currency transfers remain non-reversible for speed and finality. However, when a dispute is filed and validated through the chargeback system, the system dynamically enables reversal or remediation. This dynamic approach balances transaction speed with payer recourse based on actual needs.
3Reliability
If a chargeback system is introduced to reduce payer risk, then trust and adoption are enhanced, but system complexity increases
Solution Approach 1:
The chargeback system is designed to be self-service oriented, where payers can initiate chargebacks themselves through automated processes. The system automatically routes disputes, collects evidence from both parties, applies predefined rules for determination, and executes resolutions without requiring manual intervention from central authorities. This self-service approach reduces system complexity by automating what could otherwise require complex human-mediated processes.
Solution Approach 2:
The chargeback system implements feedback loops where outcomes of chargeback disputes are recorded and used to improve the system over time. The system learns from dispute patterns, refines its rules and processes, and provides feedback to users about dispute outcomes. This feedback mechanism enhances reliability by continuously improving dispute resolution while managing complexity through systematic learning rather than ad-hoc complexity.
Data Source
AI summary
Distributed crypto currency chargeback systems and methods include at least one system provider device receiving, through a network from a payer device associated with a payer, a chargeback report associated with a first transaction of a plurality of transactions performed using a distributed crypto currency, where the first transaction involves the payer and a payee. The at least one system provider device publishes the chargeback report in a chargeback ledger. The at least one system provider device receives, through the network from a payee device associated with the payee subsequent to publishing the chargeback ledger including the chargeback report, a chargeback response associated with the first transaction. The at least one system provider device then publishes the chargeback response in the chargeback ledger.