Network Node Securing Physical Items via Cryptographic Data Structures
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Solution Overview
Problem
There is a need for systems and methods that allow physical items to be securely stored and registered in a decentralized ledger, enabling fractionalized control and transfer while ensuring the physical item remains securely stored, as existing technologies lack adequate mechanisms for verifying control and fractional transfer of physical items.
Innovation Solution
A network node system using cryptographic data structures, including a processor and memory, generates and secures fungible cryptographic items, allowing fractionalized control of physical items to be recorded on a distributed ledger through smart contracts, enabling secure storage and transfer without centralized management.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If physical items are stored in traditional custodial relationships, then secure storage is achieved, but verification of control by third parties and fractionalized transfer are not possible
Solution Approach 1:
A cryptographic intermediary system is introduced between the physical item and the control entities. This system uses cryptographic data structures (such as hashed representations) and smart contracts on a distributed ledger to mediate verification and transfer of control rights without requiring direct access to or knowledge of the physical item's location. The intermediary cryptographic layer enables third-party verification and fractionalized control transfer while the physical item remains in secure custodial storage.
Solution Approach 2:
Instead of transferring physical control of the item, the system creates and transfers cryptographic copies (hashed representations or tokenized representations) of the item's control rights. These cryptographic copies can be fractionated into multiple tokens representing fractional ownership or control rights, which can be verified on the distributed ledger without moving the actual physical item from secure storage.
2Device complexity
If centralized management is used for physical items, then control is simplified, but regulatory complexity and lack of decentralized verification increase
Solution Approach 1:
The system segments control rights into fractionalized cryptographic tokens that can be independently managed and transferred on the distributed ledger. This segmentation allows multiple entities to hold fractional control rights without requiring complex centralized coordination, while the smart contracts automatically enforce the rules governing these fragmented control rights, reducing regulatory complexity through code-based governance rather than legal frameworks.
Solution Approach 2:
The system enables self-service through automated smart contracts that automatically verify, validate, and enforce control transfers and fractionalized rights management without requiring centralized administrative intervention. The distributed ledger automatically maintains the record of control rights and verifies transactions, eliminating the need for complex centralized management procedures and reducing regulatory oversight requirements.
3Adaptability or versatility
If cryptographic data structures are secured on a public data structure, then decentralized verification is enabled, but access control and release mechanisms become more complex
Solution Approach 1:
The system performs preliminary actions by pre-configuring smart contracts with the cryptographic data structures and access rules before any transfer or verification occurs. The smart contracts are deployed in advance with embedded logic that automatically enforces access control policies, release conditions, and fractionalized rights management. This preliminary setup eliminates the need for complex real-time access control decisions during operations, as the rules are automatically executed based on pre-established conditions.
Data Source
AI summary
In some embodiments, a network node for securing physical assets may be provided. The network node may include a processor and a memory storing instructions. The network may be configured to: receive, from a first entity, a cryptographic data structure configured to identify a physical item stored in a secured location; in response to receiving the cryptographic data structure, generate and transmit to the first entity a plurality of fungible cryptographic items; secure the cryptographic data structure on a public data structure, such that the cryptographic data structure cannot be released unless the plurality of fungible cryptographic items are received; receive, from a second entity, the plurality of fungible cryptographic items; and in response to receiving the plurality of fungible cryptographic items, transmit to the second entity the cryptographic data structure.