Cryptographic Token Blinding for Distributed Ledger Privacy
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Solution Overview
Problem
Current platforms supporting digital assets on blockchain-like systems lack comprehensive protection for financial institutions, leading to regulatory concerns and hesitation from institutional investors to adopt distributed ledgers for their transaction businesses.
Innovation Solution
A distributed system for executing transactional workflows using a shared append-only ledger with a Command Query Responsibility Segregation (CQRS) pattern, which includes a ledger writer for recording transactions and a ledger reader for detecting notifications, along with an audit unit for ensuring authorization and exclusion of contradicting agreements, utilizing cryptographic hashes and unique shared secrets for security and privacy.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If a distributed ledger system is implemented to eliminate central intermediaries and enable peer-to-peer transactions, then transparency and fraud resistance are improved, but regulatory compliance and institutional investor protection deteriorate
Solution Approach 1:
The patent segments the ledger system into public and private components. The public ledger maintains transparency and fraud resistance, while private ledgers provide regulated access controls and data protection. This segmentation allows different portions of the system to serve different functional requirements simultaneously.
Solution Approach 2:
The patent introduces regulated intermediaries (such as custodians and authorized entities) that mediate between institutional investors and the distributed ledger system. These intermediaries provide the regulatory compliance layer while the underlying distributed ledger maintains its transparency and security properties.
2Reliability
If all participants hold and validate a full copy of the ledger in real time, then trustless operation and integrity validation are improved, but system complexity and computational requirements worsen
Solution Approach 1:
The patent implements local quality by allowing different participants to hold different types of ledger copies based on their needs. Full nodes maintain complete ledgers for maximum validation capability, while light clients or regulated participants maintain selective subsets. This differential approach reduces overall system complexity while preserving integrity validation where needed.
3Reliability
If comprehensive data visibility is provided to all participants for audit purposes, then auditability and transparency are improved, but participant privacy and security deteriorate
Solution Approach 1:
The patent segments data visibility by creating private ledgers that contain sensitive institutional data accessible only to authorized participants, while public ledgers contain audit-relevant information. This segmentation enables auditability through the public ledger without exposing private data stored in restricted ledgers.
Solution Approach 2:
The patent extracts audit-relevant information from private transactions and places it in the public ledger for verification, while keeping the actual sensitive data in private ledgers. This extraction allows auditors to verify transaction validity without accessing the underlying private data.
Data Source
AI summary
A system and method for selectively transmitting cryptographically signed information to a limited number of parties of an agreement using one or more processors. For each party affected by a decision of a first party, the processors generate a token according to a function of both (i) a cryptographic key of the given party and (ii) a cryptographic key of a second party, and transmit to respective private data stores of each party (a) the first party's decision, (b) the generated token, and (c) an identity of the second party. The decision of the first party and the generated tokens are transmitted to the private data stores of only the parties that are affected by the decision of the first party.