Crypto Transaction Risk Screening Using External Payee Verification
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Solution Overview
Problem
Conventional payment service providers do not offer a mechanism for identifying or determining risks associated with crypto currency transactions, forcing parties to transact blindly with unknown or unverified entities.
Innovation Solution
A risk determination enabled crypto currency transaction system that allows payers to designate risk criteria, which are verified through a distributed network using a crypto currency public ledger and external risk information databases to ensure transactions only occur with parties that satisfy specified risk criteria.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Extent of automation
If distributed crypto currencies are used for transactions, then decentralization and autonomy are improved, but risk identification and determination capabilities deteriorate
Solution Approach 1:
The patent introduces a risk information database and risk determination system as intermediaries between crypto currency users. These intermediaries verify risk information about parties involved in transactions without requiring centralization of the crypto currency system itself, thus maintaining decentralization while enabling risk assessment.
Solution Approach 2:
The system segments the risk determination function from the crypto currency transaction system. By separating risk verification into an independent module that queries external risk databases, the patent enables risk identification without compromising the decentralized nature of crypto currency operations.
2Reliability
If risk determination mechanisms are added to crypto currency transactions, then transaction security is improved, but system complexity increases
Solution Approach 1:
The risk information database acts as an intermediary that handles the complexity of risk assessment externally. The crypto currency system itself remains relatively simple, while the intermediary database manages the sophisticated risk determination logic and data storage.
Solution Approach 2:
Risk information is collected and stored in the risk database before transactions occur. This preliminary action allows risk determination to be performed quickly during transactions without adding significant complexity to the transaction processing itself, as the heavy lifting of data collection and analysis has already been done.
3Ease of operation
If parties transact blindly without risk verification, then transaction speed and ease of operation are improved, but exposure to fraudulent activities increases
Solution Approach 1:
Risk information about parties is collected and stored in advance in the risk database. When a transaction occurs, the system quickly queries this pre-collected information to determine risk levels, maintaining transaction convenience while reducing fraud risk through prior preparation.
Solution Approach 2:
The system provides feedback about risk levels to users before transactions are completed. This feedback mechanism allows users to make informed decisions about whether to proceed with transactions, reducing exposure to fraud while maintaining operational ease for low-risk transactions.
Data Source
AI summary
Systems and methods for providing risk determination in a crypto currency transaction include receiving, through a network via a broadcast by a first payer device, a first crypto currency transaction that includes a first payee public address. A first request for a determination of risk associated with the first crypto currency transaction is then identified in the first crypto currency transaction, with the first request including risk criteria. A first payee involved in the first crypto currency transaction is then identified using the first payee public address, and first payee risk information is accessed via at least one external risk information database based on the identification of the first payee. If it is determined that the first payee risk information satisfies the at least one risk criteria in the first request, the first crypto currency transaction is provided for addition to a block in a crypto currency public ledger.