Digital Token Bridging System for Efficient Fund Transfers
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Solution Overview
Problem
Current financial systems require actual fund transfers for electronic transactions, leading to inefficiencies, restrictions on access to funds, and the need for clearinghouse operations, which increase fees and reduce operational efficiency.
Innovation Solution
A system that electronically transfers a digital representation of real funds using a fiat ledger system and a distributed ledger system connected by a bridging system, allowing for the creation, transfer, and redemption of digital tokens representing promises between financial institutions and customers, without the need for physical fund transfers or clearinghouse operations.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If actual fund transfers are used for electronic transactions, then transaction reliability is ensured, but operational efficiency decreases and fees increase
Solution Approach 1:
The patent creates digital tokens that are digital copies representing real funds. These tokens can be transferred electronically without moving the actual underlying funds, thereby maintaining transaction reliability through the promise structure while dramatically improving operational efficiency by eliminating physical fund transfers and clearinghouse operations
Solution Approach 2:
The patent introduces a bridging system as an intermediary between fiat ledger systems and distributed ledger systems. This mediator enables the creation and transfer of digital tokens representing funds, allowing efficient electronic transactions while the underlying real funds remain secured in reserve accounts, thus resolving the contradiction between reliability and efficiency
2Reliability
If actual funds are transferred for electronic transactions, then transaction security is maintained, but access restrictions increase and operational complexity increases
Solution Approach 1:
By creating digital tokens as copies representing real funds, the system maintains security through the underlying promise structure while simplifying operations. The tokens can be freely transferred and accessed without the complexity of actual fund movements, clearinghouse operations, or access restrictions
Solution Approach 2:
The patent segments the transaction system into two layers: the digital token layer for efficient transfers and the underlying fund layer for security. This segmentation allows digital tokens to be transferred freely while the real funds remain secured in reserve accounts, reducing operational complexity while maintaining security
3Productivity
If digital representations of funds are transferred without physical fund movements, then operational efficiency improves, but system complexity increases
Solution Approach 1:
The bridging system acts as an intermediary that manages the complexity of creating and redeeming digital tokens. It interfaces with both fiat ledger systems (for underlying funds) and distributed ledger systems (for token transfers), thereby enabling efficient operations while containing system complexity within the mediator layer
Solution Approach 2:
The digital tokens serve as simplified copies that can be transferred without the complexity of actual fund movements. The copying mechanism allows efficient electronic transfers while the complex underlying fund management remains secured in reserve accounts, with the bridging system managing the connection
Data Source
AI summary
A system configured to provide a customer with a digital representation of an amount of real funds for the subsequent transfer thereof to third-parties may comprise a fiat ledger system and a distributed ledger system disposed in connection through a bridging system, such bridging system configured to circulate digital tokens therefor, and redeem such digital tokens for the ultimate end-user thereof, while holding such amount of funds within a financial institution's reserve account. Consequently, such a bridging system may comprise a bridging component configured to equivocate between the fiat ledger system and the distributed ledger system by effectuating a series of ledger entries on each such system. Such a system may comprise yet additional components configured to merge disparate financial entities having distinct sets of digital tokens into a unitary version thereof, and effectuate exchanges between other third-party financial entities utilizing, for instance, digital tokens formed under a foreign currency.