Leaf Blocks Transfer Cryptocurrency Credits via Blockchain Settlement
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Solution Overview
Problem
Blockchain technology faces limitations in scalability, user adoption due to complexity, and legal compliance issues, particularly in facilitating transactions and managing cryptocurrency credits efficiently.
Innovation Solution
A method and system using leaf blocks to transfer cryptocurrency credits, allowing financial institutions to package multiple business transactions into a blockchain transaction, enabling secure and efficient transfer without requiring users to understand blockchain technology, and incorporating features for government regulation compliance.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If blockchain networks process every cryptocurrency transaction as a physical cash transaction, then security and immutability are improved, but transaction speed and scalability deteriorate
Solution Approach 1:
The patent divides transactions into two categories: settlement transactions (recorded on blockchain) and credit transactions (recorded off-chain in leaf blocks). This segmentation allows the system to maintain security for settlement while enabling high-speed credit transactions without blockchain overhead, resolving the contradiction between security and speed.
Solution Approach 2:
The patent introduces financial institutions as intermediaries that operate leaf blocks to facilitate credit transactions between customers. These intermediaries handle the bulk of transaction processing off-chain, allowing the blockchain to focus only on settlement, thus maintaining security while dramatically improving transaction speed.
2Reliability
If consumers directly interact with blockchain wallets and keys, then control and security are improved, but ease of operation deteriorates due to complexity
Solution Approach 1:
The patent enables customers to transfer cryptocurrency credits through simple applications without needing to understand or manage blockchain keys. The system automatically handles the complex blockchain interactions in the background, allowing users to benefit from blockchain security without dealing with its complexity.
Solution Approach 2:
Financial institutions act as intermediaries between customers and the blockchain network. Customers interact with familiar financial institution interfaces rather than raw blockchain wallets, simplifying operations while the intermediaries ensure proper blockchain integration and security.
3Reliability
If blockchain technology is used for all cryptocurrency transactions, then transparency and security are improved, but adaptability to regulatory requirements deteriorates
Solution Approach 1:
The patent segments transactions into public settlement transactions on the blockchain and private credit transactions in leaf blocks. This allows the system to provide transparency where needed (settlement) while maintaining privacy and flexibility for regulatory compliance in credit transactions, resolving the contradiction between transparency and adaptability.
Data Source
AI summary
A method of transferring cryptocurrency credits employs leaf blocks to transfer cryptocurrency credits which are settled by cryptocurrency through blockchain transaction(s). It comprises: maintaining two types of accounts—one for cryptocurrency and the other for cryptocurrency credits; creating at least a leaf block, by a sending financial institution, containing a plurality of business transactions that intend to transfer customers' cryptocurrency credits to customers at a receiving financial institution; calculating a mathematical summary of said leaf block; creating at least a blockchain transaction tying to said leaf block through said mathematical summary serving as a settlement to said leaf block; submitting said blockchain transaction to a blockchain; sharing said leaf block with the receiving financial institution; accessing said leaf block by the receiving financial institution, validating it and crediting transaction amounts in it to corresponding customer accounts at the receiving financial institution. A system configured to implement said method.