Distributed Ledger Currency Transfer With Revocable Anonymity
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Decentralized digital currency systems offer strong anonymity but lack the ability to trace and revoke user identities, making them susceptible to fraud and criminal activities, while centralized systems compromise user privacy by requiring registration and identity disclosure.
Innovation Solution
A method utilizing a distributed ledger with a registration and revocation authority to enable secure, traceable, and privacy-preserving digital currency transfers by encrypting user identities, allowing anonymity revocation when necessary, using public-key cryptography and zero-knowledge proofs.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If decentralized digital currency systems are used, then user anonymity is improved, but the ability to trace and revoke user identities deteriorates
Solution Approach 1:
The system segments the anonymity mechanism by introducing multiple types of identifiers: public keys for transaction signing, pseudonyms for ledger entries, and encrypted identity mappings stored in a distributed registry. This segmentation allows transactions to remain anonymous while enabling authorized tracing through the registry without compromising the core anonymity guarantee.
Solution Approach 2:
The patent introduces a distributed registry as an intermediary component that stores encrypted mappings between user identities and pseudonyms. This intermediary enables law enforcement or authorized entities to trace transactions by querying the registry with a pseudonym, while the encryption ensures that unauthorized parties cannot link identities to transactions. The registry acts as a mediator between anonymity and traceability requirements.
2Ease of operation
If centralized registration authority is used, then user identity management is improved, but user privacy deteriorates
Solution Approach 1:
The system segments the centralized authority's role by separating identity verification functions from transaction processing. The registration authority only verifies identities and stores encrypted mappings in the distributed registry, while actual transactions are processed decentralized on the ledger without involving the authority. This segmentation reduces the privacy-intruding aspects of centralization while maintaining its operational benefits.
Solution Approach 2:
The patent replaces the traditional centralized database storage of identities with a cryptographic system using public-key infrastructure and encrypted mappings in a distributed registry. Instead of a centralized authority directly storing and accessing plain-text identities, the system uses cryptographic primitives to enable identity management while preserving privacy through encryption and decentralized storage.
3Reliability
If strong anonymity is implemented, then user privacy is improved, but fraud detection and money laundering prevention deteriorate
Solution Approach 1:
The system performs preliminary actions by requiring users to register their identities and receive encrypted identity mappings before they can participate in transactions. This preliminary registration creates a traceable link between identities and pseudonyms that exists beforehand, enabling post-hoc fraud detection and money laundering investigation without affecting the anonymity of legitimate transactions.
Solution Approach 2:
The distributed registry serves as an intermediary that enables fraud detection and money laundering prevention by allowing authorized entities to query the mapping between pseudonyms and identities. When suspicious activity is detected, investigators can use the registry to trace transactions back to identities without compromising the privacy of ordinary users or transactions. The intermediary enables targeted investigation while preserving general anonymity.
Data Source
AI summary
The present disclosure relates to a method for secure, traceable and privacy-preserving with anonymity revocation digital currency transfer to at least a first user from a second user among a plurality of banked and unbanked users by using a distributed ledger comprising a plurality of ledger nodes, wherein said users perform Digital Currency transfers by adding transactions on this ledger using user devices configured to be connected to said nodes, to a registration authority and to a revocation authority, said authorities owning each one a public/private key pair, comprising:an enrollment phase, performed by a user device of said first user, comprising:sending to the registration authority evidence of the first user's identity,generating a first user identification key pair comprising a first user identification public key and a first user identification secret key,sending to the registration authority said generated first user identification public key,receiving from the registration authority a signed token generated by the registration authority after the registration authority verified first user's identity based on said evidence, said signed token being generated by signing with the registration authority secret key a token comprising said first user identification public key and said first user's identity encrypted with said revocation authority public key,a transaction phase, performed by said user device of said first user, comprising: participating with said second users in a Digital Currency transfer transaction to be added to the distributed ledger,wherein said signed token enables the revocation authority to revoke first user's anonymity by retrieving first user's identity.