Cryptocurrency Prize Fund Volatility Mitigation
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Solution Overview
Problem
The volatility of cryptocurrencies poses a significant risk for gaming establishments and players, as the value of cryptocurrency-based prize funds can fluctuate significantly, and there are security concerns related to storing and managing cryptocurrencies.
Innovation Solution
A system and method for enabling the secure use of cryptocurrencies in prize funds or gift cards, which involves generating a payable on demand document with a unique redemption code, creating a digital wallet with asymmetrical cryptographic keys, and funding it with cryptocurrency after the redemption code is validated, thereby mitigating volatility and security risks.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If cryptocurrencies are used for prize funds and payouts, then innovative payment options and player appeal are improved, but volatility risk causes significant value fluctuations in prize funds
Solution Approach 1:
The system purchases cryptocurrencies in advance of when they are needed for prize payouts. By buying cryptocurrencies ahead of time and storing them in secure wallets, the system locks in purchase prices and eliminates exposure to future price volatility. This preliminary action ensures that the prize fund value remains stable even as cryptocurrency prices fluctuate in the market.
2Ease of operation
If cryptocurrencies are stored in digital wallets for prize distribution, then payout capability is improved, but security risks from hacking and theft increase
Solution Approach 1:
The system divides cryptocurrency storage into multiple separate digital wallets rather than concentrating all funds in a single wallet. Each wallet can be secured with different access controls and security measures. This segmentation limits the potential impact of a security breach, as compromising one wallet does not expose all cryptocurrency assets. The system can distribute wallets across different secure locations or use hierarchical wallet structures.
Solution Approach 2:
The system implements preemptive security measures including cold storage (offline wallets), multi-signature requirements, and hardware security modules before any cryptocurrency is stored. These beforehand cushioning measures create multiple layers of protection that must be breached simultaneously to access funds, significantly reducing the risk of successful hacking attempts compared to traditional single-point security models.
3Reliability
If players are required to manage their own digital wallets for cryptocurrency payouts, then security control is improved, but complexity and difficulty of wallet management increase
Solution Approach 1:
The system introduces a intermediary platform layer between the cryptocurrency wallets and the players. This intermediary handles the complex tasks of wallet management, security key generation and storage, and transaction authorization on behalf of players. Players can request payouts through the intermediary system without needing to understand or manage the underlying cryptographic keys and wallet security, thus maintaining security control while eliminating complexity.
Data Source
AI summary
Systems and methods for enabling the secure use of cryptocurrencies (such as but not limited to Bitcoin, Ethereum, or Litecoin) in prize funds or gift cards that accept purchases or wagers in fiat currencies and payout in cryptocurrency. The prize funds can be associated with lotteries, charitable gaming, or casino environments with the inherent volatility of cryptocurrencies optionally mitigated and cryptocurrency payouts enabled for consumers or players without prior digital wallets as well as consumers or players with preexisting digital wallets.