Cryptographic Currency Wallet for Instant Securities Settlement
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Solution Overview
Problem
Traditional securities settlement processes are prone to risks and delays, particularly due to the insolvency of counterparty risks and the need for clearing houses, which can extend settlement times to several days.
Innovation Solution
A cryptographic currency system, known as SETLcoins, is used to facilitate nearly instantaneous securities settlement through a peer-to-peer network, utilizing a virtual wallet that generates, stores, and manages multiple asset positions, with a two-phase commitment protocol to ensure secure and immediate ownership transfer.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional clearing houses are used for securities settlement, then transaction security and risk management are improved, but settlement time is extended to several days and device complexity increases
Solution Approach 1:
The patent extracts the settlement function from traditional centralized clearing houses and implements it through a decentralized peer-to-peer cryptographic system. Each participant directly executes settlements through cryptographic verification and blockchain recording, eliminating the need for intermediary clearing houses and reducing settlement time to near-instantaneous while maintaining security through distributed consensus.
Solution Approach 2:
The patent replaces the mechanical/organizational system of centralized clearing houses with a cryptographic and blockchain-based system. Settlement is achieved through cryptographic signatures, peer-to-peer communication, and immutable blockchain records, substituting the traditional mechanical clearance process with a digital cryptographic mechanism that operates continuously without human intervention.
2Reliability
If traditional clearing houses are used for securities settlement, then risk management is improved, but device complexity and operational overhead increase
Solution Approach 1:
The patent implements self-service settlement where participants independently verify transactions through cryptographic signatures and the blockchain network automatically records and validates settlements. The system performs risk management through distributed consensus and cryptographic verification without requiring complex centralized risk management infrastructure, reducing operational overhead while maintaining reliability.
3Speed
If peer-to-peer cryptographic settlement is implemented, then settlement speed is improved to near-instantaneous, but trust requirements and system complexity change
Solution Approach 1:
The patent introduces the blockchain as an intermediary layer that enables peer-to-peer settlement without requiring direct trust between participants. The blockchain serves as a shared, immutable ledger that all participants can verify, allowing near-instantaneous settlement while distributing trust across the network rather than requiring complex verification mechanisms between each pair of participants.
Data Source
AI summary
The present disclosure is directed to security settlement in financial markets and cryptographic currencies. Particular portions of the present disclosure are directed to a cryptographic currency protocol and to a cryptographic currency that includes a positional item. The cryptographic currency protocol supports a virtual wallet that, in various embodiments, is a security and cash account for storing and managing the cryptographic currency. Opening a transaction via the virtual wallet to transfer the cryptographic currency is a strong guarantee of the availability of funds in the virtual wallet because, e.g., funds are not transacted unless the commit phase is successful.