Fractional Equity Transaction System Using Blockchain Clearinghouse

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Solution Overview

Problem

Current Bitcoin implementations lack protection for users against fraudulent or erroneous transactions, and they are not feasible for microtransactions due to high transaction costs, with no centralized source for processing, clearance, and auditing.

Innovation Solution

The Social Aggregated Fractional Equity Transaction Partitioned Acquisition Apparatus (SAFETPA) utilizes blockchain technology for secure, transparent, and efficient transaction processing, enabling fractional ownership and microtransactions by transforming virtual wallet addresses into transaction confirmation outputs, using a decentralized network for transaction verification and electronic credentials.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If Bitcoin uses decentralized peer-to-peer technology for transactions, then trustless anonymous network is achieved, but transaction costs are high and not feasible for microtransactions

Engineering Contradiction:

Improvetrustless anonymous networkVSAvoidtransaction costs

Core Design Contradiction:

ReliabilityVSLoss of energy

Solution Approach 1:

The patent segments the equity transaction into multiple fractional shares, allowing microtransactions of equity ownership. Each fractional share represents a portion of the whole equity, enabling low-cost transactions while maintaining the security benefits of blockchain technology.

Inventive Principle:

Principle #1Segmentation

Solution Approach 2:

The patent introduces a centralized clearinghouse as an intermediary that batches and processes transactions. This mediator reduces the burden on individual decentralized transactions, lowering costs while preserving the trustless nature of the underlying blockchain technology.

Inventive Principle:

Principle #24Intermediary (Mediator)

2Reliability

If Bitcoin uses cryptographic proof for transaction validation, then counterfeiting and double-spending are solved, but there is no centralized source for processing, clearance, and auditing

Engineering Contradiction:

Improvecryptographic proofVSAvoidtransaction processing system

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The patent merges the benefits of decentralized cryptographic validation with a centralized clearinghouse for processing and auditing. This combination maintains the security and reliability of cryptographic proof while adding a centralized layer that simplifies transaction management and reduces overall system complexity.

Inventive Principle:

Principle #5Merging (Combining)

Solution Approach 2:

The clearinghouse acts as an intermediary that centralizes processing, clearance, and auditing functions. This mediator handles the complexity of transaction validation and record-keeping, making the system more manageable while preserving the cryptographic security of the underlying blockchain.

Inventive Principle:

Principle #24Intermediary (Mediator)

3Reliability

If Bitcoin transactions are irreversible, then double-spending is prevented, but nonrepudiation may be compromised and user protection against fraudulent transactions is lacking

Engineering Contradiction:

Improvedouble-spending preventionVSAvoidfraudulent transactions

Core Design Contradiction:

ReliabilityVSObject-affected harmful factors

Solution Approach 1:

The patent implements a clearinghouse that provides beforehand cushioning by verifying and validating transactions before they are finalized on the blockchain. This prior check prevents fraudulent transactions from being processed, protecting users while maintaining the irreversible nature of blockchain transactions.

Inventive Principle:

Principle #11Beforehand cushioning (Prior cushioning)

Solution Approach 2:

The clearinghouse serves as an intermediary that stands between users and the blockchain network, providing a layer of protection against fraudulent transactions. It validates transactions before submission, preventing harm while preserving the security benefits of irreversible blockchain transactions.

Inventive Principle:

Principle #24Intermediary (Mediator)

Data Source

PatentUS10504179B1Social aggregated fractional equity transaction partitioned acquisition apparatuses, methods and systems

Publication Date: 2019.12.10 FMR CORP

AI summary

The Social Aggregated Fractional Equity Transaction Partitioned Acquisition Apparatuses, Methods and Systems, (“SAFETPA”) transforms fractional equity ownership purchase request inputs via SAFETPA components into transaction confirmation outputs. A Fractional Order Generation component receives a purchase request for a fractional order of an equity via a data communication network interface from a client terminal of a client having a source of funds and having a public encryption key, determines a purchase price for the fractional order of the equity by retrieving a quote for a price of a share of the equity, confirms that the source of funds contains at least the purchase price; and generates a trade order for the share of the equity. A Fractional Order Placement component obtains the trade order from Fractional Order Generation Component, transmits the trade order to a trade execution server via the data communication network, and receives a confirmation of an execution of the trade order from the trade execution server via the data communication network. A Blockchain Recordation Component receives the confirmation from the Fractional Order Placement Component, records the confirmation, the fractional share and the public key of the client in a block data structure, records the block data structure in a blockchain, wherein each block data structure of the blockchain comprises a hash of a prior block data structure in the blockchain in order to secure the blockchain from tampering, and transmits the confirmation to the client terminal via the data communication network for display to the client.