Cryptographic Identifier Selection in Blocks Using AddressScores
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Solution Overview
Problem
Blockchain systems face challenges in identifying and preventing transactions with criminal or suspicious entities, as their distributed nature impedes regulatory compliance and allows criminal activities to thrive.
Innovation Solution
Implementing AddressScores to evaluate the propensity of cryptographic identifiers for criminal or suspicious activity, using filtering nodes to exclude transactions with high AddressScores from block creation, and leveraging sources like government releases, blockchain explorers, and Mechanical Turks for label generation.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If blockchain systems maintain distributed consensus networks with cryptographic identifiers, then anonymity and security are improved, but regulatory compliance and criminal activity detection deteriorate
Solution Approach 1:
The system performs preliminary actions by pre-generating cryptographic identifiers with embedded detectable characteristics (such as specific address formats, prefixes, or patterns) that indicate their association with criminal entities. This allows mining nodes to identify and exclude these identifiers before they are used in transactions, preventing criminal activity while maintaining the overall anonymity of legitimate users.
Solution Approach 2:
The patent introduces an intermediary mechanism in the form of a filtering system that sits between the distributed consensus network and the block creation process. This intermediary evaluates cryptographic identifiers against a database of known criminal identifiers and filters out matches, enabling regulatory compliance without compromising the security or anonymity of the underlying blockchain system.
2Reliability
If mining nodes evaluate all cryptographic identifiers to prevent criminal transactions, then regulatory compliance is improved, but transaction verification efficiency deteriorates
Solution Approach 1:
Criminal cryptographic identifiers are pre-identified and stored in a database before the mining process begins. Mining nodes perform a quick lookup against this pre-prepared database rather than conducting full evaluations of all identifiers, dramatically improving verification efficiency while maintaining regulatory compliance.
Solution Approach 2:
The system applies different evaluation criteria to different cryptographic identifiers based on their characteristics. Identifiers matching known criminal patterns receive rigorous evaluation and automatic rejection, while identifiers with legitimate characteristics undergo streamlined verification, optimizing the overall compliance process.
3Reliability
If criminal cryptographic identifiers are excluded from blocks, then network security is improved, but the utility and openness of the blockchain deteriorates
Solution Approach 1:
The system extracts and removes only the specific criminal cryptographic identifiers from block inclusion, while leaving the rest of the blockchain system fully functional and open. This targeted approach maintains network security by excluding harmful elements without compromising the utility, accessibility, or versatility of the blockchain for legitimate users.
Solution Approach 2:
The patent changes the parameter of cryptographic identifier validity by introducing a new criterion: identifiers matching criminal patterns are marked as invalid and excluded from blocks. This parameter change enhances network security while preserving all other blockchain functions, as the change applies only to the validity status of specific identifiers rather than altering fundamental blockchain operations.
Data Source
AI summary
A method for detecting and tracking tainted cryptographic wallets. The method measures a wallet's propensity to engage in criminal or suspicious activity. Naturally, transacting with a criminal is tantamount either to funding crime or laundering its proceeds, so it is in our collective interest to identify—and then monitor or quarantine—any wallet with criminal association. The method also automatically flags risky withdrawal requests in real-time for further review before committing them to the blockchain. In some embodiments, the exchange can quarantine wallets at a certain AddressScore.