Distributed Ledger Currency Transfer With Revocable Anonymity
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Solution Overview
Problem
Decentralized digital currency systems offer strong anonymity but lack the ability to trace transactions for fraud prevention, while centralized systems compromise user privacy by requiring identity registration.
Innovation Solution
A method utilizing a distributed ledger with a registration and revocation authority to enable secure, traceable, and privacy-preserving digital currency transfers, allowing anonymity revocation when necessary, through user identity encryption and zero-knowledge proofs.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional centralized digital currency systems are used, then transaction security and traceability are improved, but user privacy and anonymity are lost
Solution Approach 1:
The system segments user identity information from transaction data by introducing pseudonymous addresses and cryptographic keys. User identities are separated into public keys (visible on blockchain) and private keys (secret), while additional segmentation occurs through mixing services that divide transaction flows into multiple indistinguishable paths, achieving both traceability and privacy protection simultaneously
Solution Approach 2:
The patent introduces multiple intermediary mechanisms: cryptographic protocols act as intermediaries between users and the blockchain, mixing services serve as intermediaries between transaction senders and receivers to obscure资金来源, and zero-knowledge proofs act as intermediaries that verify transaction validity without revealing underlying data, thus preserving privacy while maintaining security
2Loss of information
If anonymous digital currency systems are used, then user privacy is improved, but transaction traceability and security are reduced
Solution Approach 1:
The system implements dynamic anonymity through configurable privacy levels. Users can adjust their anonymity settings based on transaction requirements - using full anonymity for personal transactions and reduced anonymity for business transactions where traceability is needed. The mixing service dynamically adjusts the degree of obfuscation, and cryptographic protocols can switch between transparent and privacy-preserving modes
Solution Approach 2:
The patent changes key parameters of the cryptographic system to balance privacy and traceability. By adjusting the number of mixing rounds, the strength of cryptographic hashing, the granularity of zero-knowledge proof verification, and the retention period of transaction metadata, the system can optimize the trade-off between anonymity and traceability for different use cases
3Adaptability or versatility
If cryptocurrency transactions are conducted, then financial inclusion is improved, but vulnerability to hacking and fraud increases
Solution Approach 1:
The system implements beforehand cushioning through multiple security layers deployed before transactions occur: cryptographic key management systems prepare secure storage mechanisms, mixing services pre-establish anonymous transaction pools, and smart contracts include built-in security checks and fraud detection protocols. These preventive measures cushion users from hacking and fraud before they can exploit the system
Solution Approach 2:
The patent incorporates feedback mechanisms where the system continuously monitors transaction patterns for anomalous behavior, provides real-time security alerts to users, and adjusts privacy and security parameters based on detected threats. The mixing service learns from transaction data to improve obfuscation, and the system provides feedback loops that enhance security while maintaining financial inclusion
Data Source
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AI summary
The present invention 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 (31, 32...) configured to be connected to said nodes, to a registration authority (4) 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 (SE1) to the registration authority evidence of the first user's identity (IDu1), - generating (SE2) a first user identification key pair comprising a first user identification public key and a first user identification secret key, - sending (SE3) to the registration authority said generated first user identification public key, - receiving (SE4) 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 (sk RA ) a token comprising said first user identification public key and said first user's identity encrypted with said revocation authority public key (pk REVA ), • a transaction phase, performed by said user device of said first user, comprising : participating (ST1) 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.