Pre-Authorization Holds for Secure Digital Asset Payments
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Solution Overview
Problem
Current payment systems are vulnerable to security breaches, fraud, and identity theft, and digital asset payments like cryptocurrencies face acceptance issues by merchants due to operational complexities, volatility, and exposure of sensitive information, while existing mobile wallets rely on traditional payment networks susceptible to fraud.
Innovation Solution
A digital asset-based interaction system that includes a digital asset-based interaction computing entity to convert digital assets like cryptocurrencies to desired asset formats, verify transactions, and manage interactions securely, using a digital asset backing entity to lock and verify transactions, ensuring real-time and non-real-time processes to prevent fraud and maintain privacy.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional payment card systems are used, then payment processing is established and widely accepted, but the system is vulnerable to security breaches, fraud, and identity theft
Solution Approach 1:
The patent introduces a digital asset-based interaction computing entity as an intermediary between the first computing entity (customer) and second computing entity (merchant). This intermediary manages the digital asset transaction, converts digital assets to desired asset formats, and coordinates the interaction without requiring direct exposure of sensitive payment information between the customer and merchant, thereby reducing fraud and identity theft risks while maintaining payment processing reliability
Solution Approach 2:
The patent uses digital asset tokenization where a digital representation of value (digital asset) replaces traditional payment card information. The digital asset can be copied and transferred without exposing the underlying sensitive payment data, allowing multiple transactions without repeating sensitive information, thus improving security while maintaining payment functionality
2Object-affected harmful factors
If digital asset payments are used, then fraud risk is reduced, but merchants face acceptance issues due to operational complexities and volatility
Solution Approach 1:
The digital asset-based interaction computing entity provides multi-functional capabilities including conversion of digital assets to desired asset formats, verification of transactions, management of pre-authorization holds, and coordination of interactions. This universal platform simplifies merchant operations by handling multiple functions through a single integrated system, making digital asset payments easier to accept while maintaining low fraud risk
Solution Approach 2:
The system implements verification processes where the digital asset-based interaction computing entity verifies transactions and manages pre-authorization holds with defined time periods. This feedback mechanism ensures that merchants receive confirmed valid transactions while the system monitors and manages the transaction state, reducing operational complexity and improving merchant acceptance of digital asset payments
3Ease of operation
If mobile wallets with traditional payment networks are used, then convenient transactions are enabled, but data passes through multiple hardware and software layers increasing vulnerability
Solution Approach 1:
The patent extracts sensitive payment data from the traditional payment network chain and replaces it with digital asset tokenization. The digital asset-based interaction computing entity handles the conversion and verification, removing the need for data to pass through multiple hardware and software layers including payment card networks, banks, and processing systems. This extraction of sensitive data while maintaining transaction convenience significantly improves data security
Solution Approach 2:
The system uses digital asset tokenization where a copy of the value (digital asset) is transferred instead of moving sensitive payment data through multiple layers. The digital asset serves as a representative token that can be copied and exchanged without exposing the underlying financial information, maintaining transaction convenience while eliminating the security vulnerabilities associated with data passing through multiple hardware and software layers
4Reliability
If pre-authorization holds are implemented, then fraud protection is improved, but the system complexity increases
Solution Approach 1:
The digital asset-based interaction computing entity performs preliminary verification and conversion actions before the main transaction. It verifies the digital asset, converts it to the desired asset format, and establishes pre-authorization holds with defined time periods before completing the final transaction. This preliminary action approach improves fraud protection by validating transactions in advance while managing complexity through standardized pre-defined procedures
Data Source
AI summary
A method includes obtaining, by a digital asset-based interaction computing entity, pre-authorization hold first computing entity information and pre-authorization hold second computing entity information regarding initiation of a pre-authorization hold digital asset-based interaction between a first and second computing entity. The pre-authorization hold first computing entity information includes an indication of a digital asset the first computing entity intends to use. The method further includes obtaining external data pertaining to the digital asset, analyzing one or more of: the external data, a pre-authorization hold time period, and a pre-authorization hold amount to determine a pre-authorization hold procedure. The method further includes locking an amount of system digital asset and an amount of the digital asset in accordance with the pre-authorization hold procedure and sending a confirmation to the second computing entity that the pre-authorization hold digital asset-based interaction is successful.