Mining Pool Settlement Accounts for Secure Crypto-to-Fiat Payouts
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Solution Overview
Problem
The random generation of virtual currency addresses in cryptocurrency mining pool systems makes it difficult to track and secure currency transactions, leading to potential loss and system vulnerabilities.
Innovation Solution
A method and apparatus for settling cryptocurrency mining pool transactions by exchanging virtual currency into fiat currency, using a settlement account associated with a user's card number, account name, and user account information, thereby improving security and tracking.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If a random virtual currency address is generated for settlement, then the mining node can receive cryptocurrency payment, but the system becomes vulnerable to address tampering and loses tracking capability
Solution Approach 1:
The patent introduces a bank account as an intermediary between the virtual currency address and the final settlement. The bank account serves as a trusted mediator that receives cryptocurrency payments, verifies the legitimacy of transactions, and then transfers funds to the mining node. This intermediary mechanism resolves the contradiction by providing both payment capability and security/tracking without requiring the system to directly manage vulnerable virtual addresses.
2Extent of automation
If virtual currency is used for settlement, then the mining pool system can automate payment distribution, but the system exposes itself to security risks and potential losses
Solution Approach 1:
The bank account acts as a security intermediary that automates the payment process while mitigating risks. The system automatically transfers cryptocurrency to the bank account, which then automatically verifies and distributes funds to mining nodes. This automated intermediary process maintains efficiency while eliminating direct exposure to virtual currency security vulnerabilities.
Solution Approach 2:
The patent implements a cushioning mechanism by requiring the bank account to verify transaction legitimacy before completing settlements. This prior verification step acts as a protective buffer that prevents fraudulent or erroneous transactions from causing losses, while still allowing automated payment distribution to proceed.
3Ease of operation
If the mining pool system directly manages virtual currency addresses, then it can control payment distribution, but it becomes difficult to track transactions and prevent fraud
Solution Approach 1:
The bank account serves as a tracking intermediary that provides a clear audit trail for all transactions. While the mining pool system retains control over payment distribution decisions, the bank account records and verifies all transactions, making it easy to track funds and detect fraudulent activities. This separates the control function from the tracking function, resolving the contradiction.
Data Source
Figure 1A~1B
Figure 1C
Figure 2
AI summary
The present disclosure provides a currency settlement method and apparatus. The currency settlement method comprises: settling with a mining node using a virtual currency according to a workload performed by the mining node and an income type of the mining node; transacting with an exchange institution to exchange an amount of the virtual currency into an amount of a fiat currency; identifying a settlement account associated with the mining node, the settlement account being associated with a user card number, an account name, and user account information; and transferring the amount of the fiat currency to the settlement account.