Multi-Signature Digital Asset Management via Smart Contract Segmentation
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Solution Overview
Problem
The existing methods for managing cryptographic keys for cryptocurrencies are vulnerable to hacking, loss, or damage, leading to potential loss of digital assets, and intermediaries may not always be trustworthy, resulting in unsafe management and potential misappropriation of funds.
Innovation Solution
A multi-signature-based digital asset management method and device that utilizes a smart contract for secure transaction management, multi-factor authentication, and insurance coverage, allowing for the creation of new cryptographic keys and account registration upon loss, ensuring continuous use and compensation for damages through a network of terminals and insurance institutions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If cryptographic keys are stored in electronic wallets or exchanged, then cryptocurrency transactions can be managed, but the risk of hacking, loss, or misappropriation increases
Solution Approach 1:
The patent divides the cryptographic key into multiple parts called share keys, which are distributed across different electronic wallets. Instead of storing the complete private key in one location, the system segments it into multiple shares that can be combined to reconstruct the full key. This segmentation prevents single-point failures and reduces the risk of complete key loss or theft.
Solution Approach 2:
The patent introduces a third-party service provider as an intermediary that manages the share keys and facilitates the reconstruction process. This intermediary coordinate's the distribution of share keys to multiple wallets and handles the complex task of reconstructing the full private key from the shares, thereby simplifying user operation while enhancing security through distributed management.
2Ease of operation
If a single private key is used for cryptocurrency management, then operations are simple, but loss of the key results in complete loss of cryptocurrency
Solution Approach 1:
The private key is segmented into multiple share keys that are distributed across different electronic wallets. Users can lose some share keys without losing the entire cryptocurrency, as long as enough shares are recovered to reconstruct the full private key. This segmentation maintains operational simplicity while dramatically improving reliability.
Solution Approach 2:
The system performs preliminary actions by pre-distributing share keys to multiple electronic wallets before any transaction occurs. This advance distribution ensures that if a key is lost or stolen, the remaining shares can be used to reconstruct the full key, providing continuous operation capability without requiring complex recovery procedures at the time of loss.
3Ease of operation
If cryptographic keys are stored in centralized exchanges, then user operation is simplified, but trustworthiness issues and misappropriation risks arise
Solution Approach 1:
The private key is segmented and distributed across multiple electronic wallets rather than concentrated in a single centralized exchange. This distribution eliminates the single point of failure and prevents any single entity from misappropriating the entire cryptocurrency holding. Each wallet holds only a portion of the share keys, limiting the impact of any single compromise.
Solution Approach 2:
The patent introduces a third-party service provider as an intermediary that manages the share key distribution and reconstruction process. This intermediary enables users to maintain simplified operation while distributing key management across multiple entities, thereby reducing reliance on any single centralized exchange and mitigating trust issues.
Data Source
AI summary
Disclosed is a digital asset management method performed by a digital asset management device, the method including: processing, by a first terminal corresponding to the digital asset management device, a contract regarding a digital asset management service between a user, a service provider of the digital asset management service, and a third party through online connections; creating a contract account based on the contract; and registering a party account corresponding to the first terminal among party accounts, which are created based on cryptographic keys managed by the first, second, and third terminals, onto the contract account.