Offline Crypto Custody Ledger for Hack-Resistant Asset Transfers
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Solution Overview
Problem
Crypto asset transactions are prone to security risks, particularly hacking, due to vulnerabilities in online wallets such as insecure data storage and insufficient cryptography, leading to theft and loss of assets.
Innovation Solution
An offline custodian system that stores and manages crypto assets in a centralized, offline ledger, ensuring physical possession and ownership before transactions, using a wallet-less approach to minimize security risks by maintaining a secure, offline storage and transaction system.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If online wallets are used for crypto asset transactions, then transaction convenience and accessibility are improved, but security risks and vulnerability to hacking increase
Solution Approach 1:
The patent extracts the private key management function from online wallets and relocates it to offline hardware devices. The private keys are generated and stored in secure offline environments, separated from network-connected systems, thereby eliminating the vulnerability to online hacking while preserving transaction convenience through cryptographic operations.
Solution Approach 2:
The patent introduces hardware security modules and offline storage devices as intermediaries between users and the blockchain network. These intermediaries hold the private keys securely offline while enabling online transactions through cryptographic signatures, thus mediating between security requirements and transaction convenience.
2Ease of operation
If private keys are stored in online wallets, then transaction accessibility is improved, but data storage security deteriorates
Solution Approach 1:
The patent segments the crypto asset management system into online and offline components. The offline component securely stores private keys in isolated hardware devices, while the online component handles transaction initiation and broadcasting. This segmentation allows accessible transactions while protecting key storage from online threats.
Solution Approach 2:
The patent creates an inert security environment by storing private keys in offline hardware devices that are isolated from network connections and external access. This offline environment protects the sensitive data from hacking, malware, and remote attacks while still enabling transaction functionality through controlled cryptographic operations.
3Loss of information
If crypto assets are stored on public ledgers, then transaction transparency is improved, but vulnerability to theft and loss increases
Solution Approach 1:
The patent extracts the private key storage function from the public ledger system and places it in secure offline hardware devices. While transaction data remains transparent on the blockchain, the sensitive private keys are removed from the online environment and stored offline, eliminating the vulnerability to theft while preserving transaction transparency.
Data Source
AI summary
Systems and methods for secure digital asset transactions. An offline system includes a custodian computer, digital asset accounts accessible by the custodian computer and a centralized ledger maintained by the custodian computer. The custodian computer is in communication with public ledger computers of a public ledger, and receives transaction data associated with digital assets from among entity computers. Each account is prefunded with digital asset funds. The custodian computer monitors a transaction parameter of the transaction data and, in accordance with the monitoring, generates a transfer instruction indicating transfer of funds between the first and second accounts, updates the centralized ledger responsive to the transfer instruction, and transfers the funds between the first and second accounts, responsive to the transfer instruction. The transfer instruction remains offline and is not transferred to the public ledger.