Distributed Settlement Ledger With Tokenized Merchant Transactions
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Solution Overview
Problem
Existing e-commerce and electronic fund transaction systems face issues such as long duration, excess fees, and security risks due to transactions involving multiple entities and countries, which complicate the transfer of funds.
Innovation Solution
A distributed settlement platform utilizing a point-to-point distributed ledger system that anonymizes transactions, verifies accounts, generates tokenized funds, and updates merchant systems securely and efficiently, facilitating electronic transactions between multiple entities.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If traditional multi-entity transaction processing is used, then transactions can be completed between multiple countries and entities, but transaction duration becomes long and fees increase
Solution Approach 1:
The patent introduces a distributed ledger as an intermediary that enables direct peer-to-peer transactions between merchants. The ledger records transactions immutably and provides a trusted framework for exchange without requiring funds to pass through multiple intermediary entities, thereby reducing transaction duration and eliminating intermediary fees.
Solution Approach 2:
The patent extracts the intermediary processing function from traditional transaction systems and replaces it with a distributed ledger. By removing the need for multiple intermediary entities to validate and process transactions, the system achieves faster settlement and reduced fees while maintaining security and trust.
2Productivity
If traditional transaction processing through multiple entities is used, then transactions can be settled across different countries, but excess fees are incurred
Solution Approach 1:
The distributed ledger acts as a neutral intermediary that enables direct transactions between parties. By eliminating the need for multiple intermediary financial institutions, currency exchange services, and clearing houses, the system reduces the cumulative fees that would otherwise be charged at each transaction stage.
Solution Approach 2:
The patent removes intermediary fee structures from the transaction process. The distributed ledger provides a fee-minimal or fee-less transaction mechanism compared to traditional multi-entity processing, where each entity charges its own fees for processing, clearing, and settling transactions.
3Adaptability or versatility
If traditional transaction systems are used, then transactions can be processed through multiple channels, but security risks increase
Solution Approach 1:
The distributed ledger serves as a secure intermediary that provides cryptographic verification and immutable recording of transactions. This eliminates security vulnerabilities associated with multiple intermediary entities handling sensitive financial data, as the ledger provides a single source of truth that cannot be altered or compromised by any single party.
Solution Approach 2:
The patent extracts security-critical functions from multiple intermediary systems and consolidates them into the distributed ledger's cryptographic protocol. This reduces the attack surface and security risks associated with having multiple entities with access to transaction data and control mechanisms.
4Ease of operation
If centralized transaction processing is used, then transactions can be monitored and controlled, but data security and privacy are compromised
Solution Approach 1:
The patent segments control and visibility in the distributed ledger system. Each participant has full visibility and control verification capabilities, yet individual transaction details remain private between the involved parties. The ledger segments data access by permission, allowing participants to verify transaction validity without exposing sensitive information to all network members.
Solution Approach 2:
The distributed ledger provides an intermediary layer that enables transparent verification without centralized control. The cryptographic protocol acts as an impartial mediator that validates transactions based on predefined rules, eliminating the need for a centralized authority that would require access to and control over all participant data.
Data Source
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AI summary
Systems and methods for executing a distributed electronic transaction by a processing system are disclosed. One method includes receiving, by the processing system, a first transaction request from a first merchant system. The first transaction request may include a first exchange request and/or a distributed settlement agreement. The processing system may generate one or more tokens based on the first exchange request. The processing system may store a transaction amount based on the first exchange request in an exchange database. The processing system may transmit the one or more tokens to the first merchant system. The processing system may transmit one or more tokens based on the payment request to one or more second merchant systems.