Non-Custodial Digital Wallet Transaction Security via Smart Contract Verification
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Solution Overview
Problem
Current payment systems are vulnerable to security breaches, fraud, and identity theft, and digital asset-based interactions, such as cryptocurrency payments, face challenges like operational complexity, volatility, and public exposure of sensitive information, making them difficult for merchants to adopt and use effectively.
Innovation Solution
A digital asset-based interaction system that facilitates secure, real-time transactions between source and destination computing entities using a non-custodial digital wallet application, integrated with a distributed ledger technology network, allowing merchants to accept digital assets without holding private keys and providing flexibility in digital asset management, while ensuring secure and fraud-less transactions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If merchants use traditional payment card systems, then transaction security is maintained through established protocols, but processing fees are high and transaction steps are time-consuming
Solution Approach 1:
The patent segments the transaction verification process by separating the security validation function from the traditional multi-entity payment network. The smart contract on the distributed ledger independently verifies transaction authenticity without requiring sequential authorization from multiple financial institutions, thus reducing processing time while maintaining security through cryptographic proof rather than institutional trust.
Solution Approach 2:
The patent introduces a distributed ledger with smart contracts as an intermediary layer between merchants and customers. This intermediary automates the trust verification process through predefined contractual rules encoded on the ledger, eliminating the need for traditional intermediaries like payment processors and banks, thereby reducing both time and fee requirements while maintaining transaction security.
2Productivity
If merchants adopt digital asset-based interactions, then processing fees are reduced and transaction speed is improved, but operational complexity increases due to private key management requirements
Solution Approach 1:
The patent extracts the complex private key management functionality from the merchant's operational responsibilities and relocates it to the customer's digital wallet. The smart contract architecture allows customers to hold and manage their own private keys securely in their wallets, while merchants simply interact with the distributed ledger through standard interfaces, thus maintaining fast transaction processing without burdening merchants with key management complexity.
Solution Approach 2:
The patent implements self-service by enabling customers to autonomously manage their digital assets and transaction authorization through their digital wallets. The smart contracts automatically handle verification and execution without requiring merchant intervention in key management, allowing customers to service their own security needs while merchants benefit from simplified operations with reduced complexity.
3Adaptability or versatility
If merchants use non-custodial digital wallets, then control over digital assets is maintained by customers, but security vulnerabilities exist in digital wallet applications
Solution Approach 1:
The patent applies beforehand cushioning by implementing smart contract-based verification that acts as a protective layer between the digital wallet and the transaction execution. The smart contracts pre-validate transaction parameters, asset ownership, and contractual conditions before allowing transfers, thus cushioning against security vulnerabilities in digital wallet applications while maintaining customer control over their assets. This pre-verification mechanism compensates for potential weaknesses in wallet security.
4Stability of the object's composition
If cryptocurrency payments are used, then transaction finality is achieved, but volatility and public exposure of sensitive information make adoption difficult
Solution Approach 1:
The patent applies preliminary action by having smart contracts pre-establish transaction terms, pricing, and exchange rates before the actual transaction occurs. The distributed ledger records and validates these predetermined terms, ensuring transaction finality while protecting merchants from volatility. Sensitive information is obscured through cryptographic hashing and selective disclosure mechanisms built into the smart contract framework, making adoption easier by removing volatility risk and information exposure concerns.
Data Source
AI summary
A method includes accessing, by a source computing entity, a destination computing entity-presented user interface to initiate a digital asset-based interaction; providing, by the source computing entity, a set of source inputs to the digital asset-based interaction computing entity, via the destination computing entity-presented user interface; generating, by the digital asset-based interaction computing entity, a digital asset-based interaction request having instructions for pulling the digital assets; locking, by the digital asset-based interaction computing entity, an amount of system digital assets as collateral for the digital assets; and sending, by the digital asset-based interaction computing entity, the destination computing entity a notification of a successful digital asset-based interaction based on the generation of the digital asset-based interaction request.