Digital Asset Regulatory Unit for Secure Custody
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Solution Overview
Problem
Conventional digital asset trading systems are vulnerable to hacker attacks and improper management, leading to potential losses for users, as digital assets are stored in exchanges that can be targets for cybercrime and may face bankruptcy.
Innovation Solution
A digital asset management system and method that stores digital asset data in a regulatory account of a digital asset regulatory unit, which includes a financial unit and a digital asset regulatory unit connected through financial accounts and regulatory accounts, ensuring higher security and avoiding risks associated with digital asset exchanges.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If digital assets are stored in a digital asset exchange for easy management and trading, then the ease of operation is improved, but the security and reliability deteriorate due to hacker attacks and exchange bankruptcy risks
Solution Approach 1:
The system segments the digital asset storage function from the trading function. The digital asset regulatory unit separately stores digital asset data (including private keys) from the exchange, creating independent storage entities. This segmentation ensures that even if the exchange is compromised, the stored assets remain secure in the regulatory unit.
Solution Approach 2:
The digital asset regulatory unit acts as an intermediary between the exchange and the user's cryptocurrency wallet. It provides a secure intermediate storage layer that mediates asset transfers, allowing users to manage assets through the exchange interface while actual storage occurs in the secure regulatory unit, thus protecting against exchange bankruptcy and hacking risks.
2Reliability
If digital asset data is stored in a cryptocurrency wallet for high security, then the security is improved, but the ease of operation deteriorates due to private key management difficulties
Solution Approach 1:
The digital asset regulatory unit serves as an intermediary that manages private keys securely while providing user-friendly access. Users interact with the system through familiar exchange interfaces or financial account systems, while the regulatory unit handles the complex private key management in the background, combining the security of wallet storage with the ease of exchange operation.
Solution Approach 2:
The system enables users to access and manage their digital assets through existing financial account systems or exchange accounts without needing to directly handle private keys. The regulatory unit automatically manages key storage and retrieval, allowing users to perform transactions through standard authentication methods while maintaining cryptographic security.
3Productivity
If digital assets are kept in exchange accounts for convenient trading, then the productivity is improved, but the loss of substance increases due to potential misappropriation and bankruptcy
Solution Approach 1:
The system separates the trading functionality (maintained in exchanges for productivity) from the asset custody function (moved to regulatory units for security). Users can continue to trade digital assets through exchange interfaces with high productivity, while the actual assets are stored in secure regulatory units, eliminating the risk of loss from exchange mismanagement or bankruptcy.
Solution Approach 2:
The digital asset regulatory unit acts as a secure intermediary that enables trading operations without requiring assets to be physically held in exchanges. The regulatory unit holds assets in custody and facilitates trades by transferring assets between users' regulatory accounts, maintaining trading efficiency while eliminating exchange custody risks.
Data Source
AI summary
This invention provides a digital asset management system and management method, and includes a financial unit and a digital asset regulatory unit. Users can apply for a regulatory account from the digital asset regulatory unit to establish a connection between a financial account of the financial institution, the regulatory account of the digital asset regulatory unit, and an exchange account of a digital asset exchange. A digital asset data purchased by users through the digital asset exchange will not remain in the exchange account for a long time, but will be immediately transferred and stored in the regulatory account of the digital asset regulatory unit through the financial unit. The digital asset regulatory unit includes a transaction ledger to store a public key and a private key of the digital asset data.