Interbank Settlement via Segmented Consensus Layers
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Solution Overview
Problem
Current interbank transaction systems are inefficient due to numerous verification steps, high transaction costs, and security risks, particularly with the use of central banks and public shared ledgers, which expose privacy issues and increase bureaucratic overhead.
Innovation Solution
A method utilizing a centralized computer system with a mainchain and private sidechains, employing consensus layers and Byzantine fault tolerance to enable secure, real-time interbank settlements, minimizing transactions through the central bank and using tokens to reduce account balance updates, while maintaining privacy and regulatory compliance.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Device complexity
If a central bank is used to process interbank transactions, then settlement resolution can be simplified, but numerous processing and verification steps consume computational resources and increase transaction costs
Solution Approach 1:
The system segments the centralized ledger into multiple distributed nodes, each maintaining a copy of the ledger. This segmentation eliminates the need for a single central processing point, distributing the verification workload across multiple participants and reducing the computational burden on any single node while maintaining system-wide consistency through consensus mechanisms.
Solution Approach 2:
The distributed ledger system enables participants to verify transactions independently through consensus algorithms without requiring centralized verification. Each node self-validates transactions by applying the same consensus rules, eliminating redundant verification steps and reducing overall computational resource consumption while maintaining security and integrity.
2Productivity
If a central bank processes all transactions, then settlement can be expedited, but the system requires complex verification and security systems resulting in high transaction costs
Solution Approach 1:
The system divides the transaction processing function across multiple distributed nodes rather than concentrating it in a central bank. This segmentation enables parallel processing of transactions, increasing settlement speed while reducing the computational complexity and costs associated with centralized verification systems.
Solution Approach 2:
The distributed ledger system provides universal verification capabilities to all participating nodes, eliminating the need for specialized centralized verification infrastructure. Each node performs the same verification functions, reducing redundant security systems and lowering transaction costs while maintaining expedited settlement through efficient consensus mechanisms.
3Reliability
If banking systems store large volumes of financial information for settlement resolution, then settlement can be performed, but systems become targets for hacks, malware, and data corruption
Solution Approach 1:
The system segments the financial information storage across multiple distributed nodes rather than concentrating it in a single centralized database. This segmentation ensures that no single point of failure exists, and the system can continue operating even if some nodes are compromised, thereby maintaining settlement resolution capability while reducing security risks.
Solution Approach 2:
Each node in the distributed ledger system independently verifies and maintains the ledger data, providing self-service security validation. This eliminates the single point of vulnerability in centralized systems, as each node autonomously validates transactions and maintains data integrity through consensus, making the system resistant to hacks, malware, and data corruption.
4Loss of information
If public shared ledgers are used, then transparency is achieved, but privacy issues and bureaucratic overhead increase
Solution Approach 1:
The system implements local quality by allowing different nodes to have different levels of access to transaction information based on their permissions and roles. This enables transparency for authorized participants while maintaining privacy for sensitive information, reducing bureaucratic overhead by eliminating the need for centralized information management and access control mechanisms.
Data Source
AI summary
A method of providing secure ledger distribution for interbank settlement includes maintaining a first consensus layer in a mainchain among a plurality of nodes of the centralized computer system and a second consensus layer in a first private sidechain among at least one node of the centralized computer system and computer systems of at least a first sender bank and a first receiver bank, each of which have an account with the central bank. A first transaction is received from the computer system of the first sender bank as a first payment request. It is determined that the first transaction is valid and consensus is reached on a distributed ledger in the mainchain. A first finality proof for the first transaction is forwarded to the first private sidechain. The first transaction is added to a first private ledger accessible only within the first private sidechain.