Distributed Ledger Fund Transfer With Identity Traceability
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Solution Overview
Problem
Existing cryptocurrency systems face challenges in traceability and scalability, leading to regulatory restrictions and fraud, with public-key/private-key pairs failing to ensure user identity verification and transaction tracking, and wallet-based systems exposing personal bank accounts to risk.
Innovation Solution
A system and method for secure and traceable fund transfers using a Traceable Secure Digital Currency Blockchain (TSDCB) with smart contract microservices for currency conversion and identity verification, enabling transparent and scalable transactions across various currencies.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If public-key/private-key pairs are used for cryptocurrency transactions, then security and verification of digital assets are improved, but traceability of user identities and transactions deteriorates
Solution Approach 1:
The patent introduces a centralized identity management system as an intermediary between the blockchain and regulatory authorities. This system maps public keys to real-world identities through a centralized database, enabling traceability without compromising the cryptographic security of transactions. The intermediary layer allows regulators to link blockchain addresses to identifiable users while maintaining the integrity of the cryptographic verification process.
2Reliability
If UTXO model is used to track cryptocurrency units, then prevention of double-spending is improved, but scalability and transaction tracking efficiency deteriorates
Solution Approach 1:
The patent segments the UTXO model by introducing account-based structures that group multiple UTXOs into hierarchical accounts. This segmentation allows for more efficient tracking and management of digital assets at different levels (wallets, accounts, transactions), improving scalability while maintaining double-spending prevention. The segmented structure enables better organization of large numbers of transactions and assets.
Solution Approach 2:
The patent adds a dimensional layer by introducing account hierarchies and metadata dimensions beyond the traditional flat UTXO structure. This includes adding account levels, transaction types, and regulatory metadata dimensions, which improves tracking efficiency and scalability while preserving the core security functions of the UTXO model.
3Ease of operation
If wallet-based systems with UPI are used for fund transfers, then ease of operation and user experience are improved, but security and fraud prevention deteriorates
Solution Approach 1:
The patent implements feedback mechanisms through real-time monitoring, anomaly detection, and regulatory compliance checks integrated into the transaction flow. The system provides feedback to users about transaction status, security alerts, and compliance requirements, while simultaneously monitoring for fraudulent patterns and providing real-time responses to prevent fraud without compromising user experience.
Data Source
AI summary
The present disclosure generally relates to fund transfer/financial transactions, more particularly to system and method for secure and traceable fund transfer operation through a distributed ledger. The system receives, from sender or receiver of user device, keyword-based query to determine first user public key or second user public key. System triggers user device of sender, to sign off amount to be transferred to determined first user public key of receiver, and transmits signed-off amount to blockchain network. The system receives from blockchain network, validation of transfer request, and invokes check and debit smart contract microservice, to check balance and debit in the TSDCB account of sender. The system invokes transfer smart contract microservice to credit the debited amount to TSDCB account of receiver, and identify, TSDCB Account Identities (TA-IDs) for sender and receiver. The system records the transaction in a ledger associated with the blockchain network.