Multi-Signature Cryptocurrency Custody With Device Loss Recovery

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Solution Overview

Problem

Users face challenges in managing cryptocurrency due to the complexity of self-custody solutions, which require maintaining cryptographic keys and dealing with security concerns, while third-party custody solutions raise issues of trust and control over assets.

Innovation Solution

A cryptocurrency management system comprising a cryptocurrency management device, mobile communication device, and server that split the authority to control cryptocurrency transactions, enabling flexible self-custody with backup encryption and social recovery mechanisms, allowing recovery without requiring users to remember complex secrets or rely on third parties.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If users implement self-custody to maintain control over their cryptocurrency assets, then user autonomy and security are improved, but the complexity of managing cryptographic keys and the risk of losing access increase

Engineering Contradiction:

Improveuser control over assetsVSAvoidcomplexity of managing cryptographic keys

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The system segments the cryptographic key management into multiple components: a primary key stored by the user, backup keys distributed to trusted contacts, and a recovery mechanism that combines these segments. This segmentation allows users to maintain control while reducing the burden of managing a single complex key, as the key management responsibilities are divided across multiple entities and storage locations.

Inventive Principle:

Principle #1Segmentation

2Reliability

If users implement self-custody to maintain control over their cryptocurrency assets, then user autonomy is improved, but the risk of unauthorized access through loss of stored cryptographic keys increases

Engineering Contradiction:

Improveuser control over assetsVSAvoidrisk of unauthorized access

Core Design Contradiction:

ReliabilityVSObject-affected harmful factors

Solution Approach 1:

The system performs preliminary actions by pre-distributing backup cryptographic keys to trusted contacts before any loss or unauthorized access occurs. These backup keys are generated and stored in advance, creating a safety net that can be activated only when needed. This preliminary preparation eliminates the need for users to react under stress when losing access, and prevents unauthorized access since the backup mechanism requires verification of legitimate ownership through multiple trusted contacts.

Inventive Principle:

Principle #10Preliminary action

3Ease of operation

If users rely on third-party custodians to hold cryptographic keys, then the complexity of key management is reduced, but security concerns and loss of control over assets increase

Engineering Contradiction:

Improveease of key managementVSAvoidsecurity and control over assets

Core Design Contradiction:

Ease of operationVSReliability

Solution Approach 1:

The system introduces trusted contacts as intermediaries between the user and the cryptographic key management process. These intermediaries hold backup keys and can assist with recovery without having full control over the assets. This intermediary layer provides ease of operation similar to third-party custodians while maintaining security and user control, as the intermediaries cannot unilaterally access or transfer funds without user verification through the multi-signature or recovery mechanism.

Inventive Principle:

Principle #24Intermediary (Mediator)

4Ease of operation

If third-party custodians are used to store cryptographic keys, then ease of operation is improved, but the risk of asset loss during bankruptcy or unanticipated events increases

Engineering Contradiction:

Improveease of key managementVSAvoidaccess to cryptocurrency during bankruptcy or unanticipated events

Core Design Contradiction:

Ease of operationVSReliability

Solution Approach 1:

The system segments the key management responsibilities between the user, multiple trusted contacts, and the cryptocurrency network. Unlike third-party custodians who centralize control and are vulnerable to bankruptcy, this segmented approach distributes trust across multiple independent entities. The user retains ultimate control through the ability to recover keys via trusted contacts, ensuring access continuity even if one segment (user device or contact) becomes unavailable.

Inventive Principle:

Principle #1Segmentation

Data Source

PatentUS12536531B2Methods and systems for managing cryptocurrency

Publication Date: 2026.01.27 BLOCK INC

AI summary

The present disclosure generally relates to methods, systems, apparatuses, and non-transitory computer readable media for managing cryptocurrency. A cryptocurrency management system has a cryptocurrency management device (CMD), a mobile communication device (MCD), and a cryptocurrency management server (CMS) that are each configured to store a respective private key for use in generating a respective authenticating signature for a multi-signature address of a cryptocurrency network. Any two of the three authenticating signatures capable of being generated by the CMD, MCD, and CMS may be combined to generate a fully authenticated request for transferring cryptocurrency associated with the multi-signature address. The system provides the user with a flexible self-custody solution that permits him or her to transfer cryptocurrency without having to access the private key stored at the CMS. However, the CMS enables for recovery in the event of loss or unavailability of one or both of the CMD and/or the MCD.