Integrated Cryptocurrency Payment APIs for Near-Instant Fiat Settlement
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Solution Overview
Problem
The integration of cryptocurrency into mainstream commerce has been slow due to complexities and lack of instant settlement capabilities, leading to delays in blockchain confirmations that are not conducive to the pace of contemporary commerce.
Innovation Solution
A system that uses unique transaction-specific cryptocurrency wallets and blockchain-based ledgering, converting fiat currency to cryptocurrency at the point of sale through a streamlined software application, utilizing a settlement bank for immediate fiat currency transfer while offloading conversion delays to the blockchain backend.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If cryptocurrency transactions use traditional blockchain confirmations, then security and decentralization are maintained, but transaction speed and settlement time deteriorate due to confirmation delays
Solution Approach 1:
The patent segments the cryptocurrency transaction process into two independent parts: (1) a fast settlement layer using traditional fiat currency systems for immediate payment processing, and (2) a blockchain layer for recording the transaction hash and ensuring cryptographic security. This segmentation allows the settlement to occur rapidly via fiat systems while the blockchain provides asynchronous security verification, resolving the contradiction between speed and security.
Solution Approach 2:
The patent introduces a merchant account as an intermediary that holds both fiat currency and cryptocurrency. The merchant account acts as a buffer that receives fiat currency immediately from the payer and simultaneously records the corresponding cryptocurrency transaction hash on the blockchain. This intermediary enables immediate settlement while the blockchain confirmation proceeds independently in the background, resolving the speed-security tradeoff.
2Reliability
If cryptocurrency transactions are processed through multiple blockchain confirmations, then transaction reliability is improved, but transaction latency and processing time worsen
Solution Approach 1:
The patent performs preliminary action by requiring the payer to pre-fund their merchant account with fiat currency before making a cryptocurrency payment. When the payment is initiated, the system immediately checks if sufficient fiat funds are available in the merchant account and transfers them instantly to the payee. The blockchain confirmation of the cryptocurrency transaction occurs independently in the background, but the actual settlement has already been completed in advance, eliminating transaction latency while maintaining reliability through pre-verification of funds.
3Speed
If cryptocurrency payments are converted to fiat currency at the point of sale, then instant settlement capability is improved, but system complexity and conversion overhead worsen
Solution Approach 1:
The patent makes the merchant account universal by enabling it to hold and manage both fiat currency and cryptocurrency simultaneously. The account can receive payments in either currency type, automatically convert between them using stored conversion rates, and settle payments in the appropriate currency. This multi-functionality eliminates the need for separate conversion systems and integrations, reducing system complexity while enabling instant settlement by allowing the merchant account to operate in whichever currency is most efficient for each transaction.
Data Source
AI summary
Approaches disclosed herein provide digital payment processing that integrates cryptocurrency transactions with traditional banking systems through the use of, for example, blockchain technology in a streamlined digital payment process. As an example, a digital payment processing system may integrate cryptocurrency with exchanges and banking systems via APIs. Such integration allows for the determination and use of real-time exchange rates, as well as almost immediate transfer of funds between cryptocurrency and fiat (traditional) or other such currency. By automating the exchange process and connecting directly to financial institutions for instant fiat settlement, such approaches can effectively avoid the usual delays of blockchain (or other distributed ledger-based) confirmations. Such a system may also utilize other technologies for facilitating a faster transaction process, such as off-chain solutions or layer-2 scaling solutions.