Multi-Signature Virtual Wallets for Contingent Payment Reversal
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Solution Overview
Problem
Conventional transactions of virtual currencies on a global transaction ledger are typically final and irreversible, creating challenges in exchanging them for reversible payments in fiat currency or financial instruments, as there is no mechanism to reverse or reclaim funds once sent, unlike traditional fiat currency transactions.
Innovation Solution
A contingent transfer of value system using multi-signature wallets with authorization schemes, such as 2-of-3, allows for exchanging irreversible virtual currency payments to reversible fiat currency payments by configuring wallets with multiple private keys, ensuring that funds can be reclaimed if a contingency event occurs.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If conventional virtual currency transactions are used, then transaction finality and irreversibility are achieved, but the ability to reverse payments in case of contingency events is lost
Solution Approach 1:
The patent applies dynamics by making the transaction reversibility status changeable based on contingency events. The system transitions transactions from an irreversible state to a reversible state when predefined contingency events occur, allowing adaptive response to different situations while maintaining transaction finality under normal conditions
Solution Approach 2:
The patent introduces an intermediary mechanism (the contingent payment system with event monitoring and reversal logic) that mediates between the irreversible nature of blockchain transactions and the need for reversibility in certain circumstances. This intermediary layer enables conditional reversibility without compromising the underlying blockchain's transaction finality
2Reliability
If multi-signature wallets with authorization schemes are implemented, then payment reversibility and risk management are improved, but system complexity increases
Solution Approach 1:
The patent applies segmentation by dividing the wallet control into multiple private keys with different authorization levels. Instead of a single key, the system uses multiple keys that must collectively satisfy authorization schemes (e.g., 2-of-3), segmenting the security function while enabling reversible transactions through coordinated key management
Solution Approach 2:
The patent changes the parameter of wallet authorization from a simple single-key model to a multi-key model with configurable authorization schemes. By adjusting parameters like the number of required signatures and authorization thresholds, the system flexibly balances security and reversibility needs without fixed complexity
3Reliability
If irreversible virtual currency payments are converted to reversible fiat currency payments, then financial risk is reduced, but transaction efficiency and speed decrease
Solution Approach 1:
The patent applies preliminary action by pre-configuring authorization schemes and contingency event definitions before transactions occur. The reversal mechanism is prepared in advance through multi-signature wallet setup, allowing rapid response to contingency events without ad-hoc complexity, thus minimizing the impact on transaction speed while maintaining reversibility
Data Source
AI summary
Approaches are described for contingent transfers of value. A configuration record for an account associated with a virtual wallet is obtained. The configuration record is used to evaluate at least one virtual wallet of an owner account. Based on the configuration record, keys or other secret data and an authorization scheme can be determined and applied to virtual wallets that are part of a contingent contract. Thereafter, the virtual wallets can be utilized to exchange tangible and virtual digital currencies in various financial transactions, banking operations, and other asset exchanges and/or utilized for another purpose such as exchanging an irreversible transfer of value as in a virtual currency to a reversible transfer of value as in fiat currency or a financial instrument.