Physical Digital Currency Medium Multi-Factor Authorization
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Current physical representations of digital currency, such as paper wallets and physical coins, fail to provide exclusive control over digital currency balances, as manufacturers often retain knowledge of private keys, leading to potential misappropriation risks, and these instruments cannot be used for payments due to lack of exclusive ownership.
Innovation Solution
The process of issuing, validating, and devaluing physical media with multi-factor authorization, where a software application generates and combines authorization factors with digital signatures on a tamper-evident medium, ensuring only the current holder controls the digital currency, using security features like unique identifiers and tamper-evident boxes to prevent counterfeiting and misappropriation.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If paper wallets are used to store digital currency, then the private key can be backed up in physical form, but the holder cannot have exclusive control since unlimited copies can be made
Solution Approach 1:
The private key is segmented into multiple parts and distributed across multiple physical substrates. Each substrate contains only a portion of the key material, making it impossible to reconstruct the full private key without all parts. This segmentation prevents unauthorized copying while maintaining reliable exclusive control, as the holder possesses all necessary segments but cannot be replicated without all segments.
Solution Approach 2:
Multiple authorization factors are nested within a hierarchical structure where outer layers protect inner layers. The physical substrate contains embedded security features, tamper-evident elements, and authorized signature storage, with each layer providing additional protection. This nesting creates increasingly difficult barriers to copying while ensuring that only the complete nested structure represents valid exclusive control.
2Reliability
If manufacturers integrate private keys into physical coins with tamper-evident stickers, then the physical form is more secure, but the manufacturer retains knowledge of all private keys creating misappropriation risk
Solution Approach 1:
The harmful element (manufacturer's ability to access private keys) is extracted from the system. The issuance process is designed so that the manufacturer never obtains the private key material or authorization factors. Instead, the manufacturer only provides the physical substrate and verifies authorized signatures without ever seeing the actual key data, eliminating the misappropriation risk while maintaining tamper evidence.
Solution Approach 2:
An intermediary verification process is introduced where the manufacturer acts as a mediator that verifies authorized signatures without accessing the private key material. The verification system uses public key cryptography and authorized signature validation, allowing the manufacturer to confirm authenticity without ever holding the secret key, thus preventing misappropriation while maintaining security.
3Reliability
If BIP 38 password-protected private keys are used, then the first holder knows the password providing exclusive control, but subsequent holders cannot have exclusive control since the first holder retains knowledge
Solution Approach 1:
The authorization mechanism is segmented into multiple independent factors that must be combined. The first holder's password is just one factor among several (including authorized signatures and other authorization factors). When transferring control, different combinations of these segmented factors can be used, allowing exclusive control to be transferred to different holders without the original holder retaining knowledge or access.
Solution Approach 2:
The control mechanism transitions from a single-dimensional password system to a multi-dimensional authorization space. Instead of relying solely on a password known to the first holder, the system uses multiple independent authorization dimensions (authorized signatures, embedded factors, verification codes). This dimensional expansion allows exclusive control to be transferred by providing different combinations of factors to different holders.
4Reliability
If physical media contain multiple authorization factors and digital signatures, then counterfeiting becomes difficult, but the issuance and verification process becomes more complex
Solution Approach 1:
The verification process is designed to be self-service, where the physical substrate itself provides the verification mechanisms. Tamper-evident features automatically indicate compromise, authorized signatures are embedded and self-verifying, and the structure of the physical media encodes validation information. This self-service approach reduces the complexity of external verification systems while maintaining high counterfeiting resistance.
Data Source
Figure 1
Figure 2
Figure 3
AI summary
A method of a transfer of the digital currency encryption keys through the process of issuance, validation and devaluation of physical medium with multi-factor authorization, wherein said medium distributed on the market as blank and to which belongs a second authorization factor (5A) safely stored with the manufacturer or integrated into the medium in form of a tamper-evident box, is loaded by an issuer using a SW application for the medium issuance and based on a first authorization factor (2A) generated by the issuer, an identifier of the medium and other data an address is derived and passed to the issuer to which he sends the balance of the digital currency in an amount equivalent to the denomination of the medium. Then, through the on-line service for the issuance of digital signatures, the issuer is on request granted the digital signature after meeting all formalities, in particular the authenticity of the medium piece and the transferred sum of the digital currency balance being equal to the denomination of the medium. The issuer then combines the digital signature with the first authorization factor using the software application for medium issuance and adds these data to the medium especially by print, hand-write or as a sticker. That way he activates the medium and makes it passable to the next holder, even repeatedly. The recipient carries out a visual inspection and verifies the medium using a software application for medium verification, especially the digital currency balance. Then this SW application verifies the authenticity of the digital signature (3A) after loading the first authorization factor (2A) and the digital signature (3A), the first authorization factor (2A) is validated, and the recipient compares the digitally signed data with the data visible on the medium. Subsequently, the recipient loads, using the software application for redemption of digital currency, all authorization factors (2A and/or 5A) available on this new duly issued physical medium in active state, possibly adds other authorization factors known to him, and compiles and authorizes an electronic transaction in the digital currency network to redeem funds in the electronic form to the private address of the recipient. The result is the transfer of encryption keys of digital currency through the process of issuance, validation and devaluation of physical medium with multi- factor authorization, and thus effecting a payment transaction between the issuer and the final recipient by digital currency. Part of the result is also a visibly devaluated medium. A physical medium of encryption keys for the digital currency to conduct the transfer of encryption keys through the process of issuance, validation and devaluation of the physical medium described in claim 1, wherein said medium is made of a flat plane base body of any shape (in particular a geometrical figure), and compact materials (especially plastics, paper, metals and their alloys) with one of its major plane surfaces identified with the unique alphanumeric identifier (1). This medium contains, depending on a particular model, applications of protective features against counterfeiting, with one or both major plane surfaces having box (2) for receiving the first authorization factor (2A) and box (3) for adding the digital signature (3A).