Cryptocurrency Exchange Rate Locking for Fast Bitcoin Payments
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Solution Overview
Problem
Existing Bitcoin transaction systems face challenges such as lengthy verification times, high miner fees, security risks for Bitcoin addresses, fluctuating exchange rates, and lack of user control over private keys, which deter users from transacting with bitcoin.
Innovation Solution
A host computer system with a processor, network interface, and data store that enables wallet establishment, secure login, feeless transactions, and controlled private key management, along with exchange rate locking and user-controlled vaults to enhance security and efficiency in bitcoin transactions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If block chain verification is performed for every transaction, then transaction security is improved, but transaction time increases and miner fees increase
Solution Approach 1:
The patent segments the verification process by introducing trusted third-party hosts that pre-verify transactions and group them into batches. Individual transactions are verified by the host system rather than requiring full block chain verification for each transaction, reducing time while maintaining security through the host's verification process and subsequent batch broadcasting to the Bitcoin network.
Solution Approach 2:
The patent introduces host computer systems as intermediaries between users and the Bitcoin network. These hosts act as mediators that verify transactions, group them into batches, and broadcast them to the network. This intermediary layer reduces the time and cost for individual transactions while maintaining security through the host's verification process and the eventual block chain confirmation.
2Ease of operation
If Bitcoin addresses are stored in wallets for easy access, then ease of operation is improved, but security risk increases
Solution Approach 1:
The patent segments wallet functionality by introducing multiple virtual wallets within a single user account. Each virtual wallet can have its own security settings and Bitcoin addresses. Users can choose which wallet to use for different purposes, allowing easy access to funds while maintaining security through segregated address management and the ability to use different wallets for different trust levels.
Solution Approach 2:
The patent creates multiple virtual copies of wallet functionality within a single account. Instead of storing all Bitcoin addresses in one wallet, the system creates multiple virtual wallet instances, each with its own set of addresses and security parameters. This allows users to access funds easily through the familiar wallet interface while distributing risk across multiple virtual containers.
3Ease of operation
If exchange rates are displayed in local currency, then ease of operation is improved, but loss from rate fluctuation increases
Solution Approach 1:
The patent implements preliminary action by locking in exchange rates at the time of transaction initiation. When a user views prices in local currency or initiates a purchase, the system secures the exchange rate at that moment. This allows users to shop with confidence knowing the rate is fixed, eliminating the risk of rate fluctuations between browsing and purchasing while still displaying convenient local currency prices.
4Reliability
If private keys are controlled by users for security, then reliability is improved, but ease of operation worsens
Solution Approach 1:
The patent introduces host computer systems as intermediaries that manage private key operations. Users can initiate transactions through the user-friendly interface without directly handling private keys. The host system securely manages the cryptographic operations, signing transactions on behalf of users while maintaining the security benefits of private key control. This eliminates the technical complexity of private key management while preserving security through the host's secure handling of keys.
Data Source
AI summary
In some embodiments, in connection with an API request to transact with an entity, a first conversion rate associated with a first time may be determined, where the first conversion rate is a current conversion rate for an on-chain asset at the first time; Based on a monitoring of a blockchain, a receipt of the on-chain asset at a second blockchain address from a first blockchain address associated with the user may be detected on the blockchain. In response to the detection, the on-chain asset may be converted to an off-chain asset at a second time associated with a second conversion rate, the second conversion rate being the current conversion rate for the on-chain asset at the second time. An amount of the off-chain asset may be transmitted to the entity, where the amount of the off-chain asset sent to the entity is based on the first conversion rate.