Digital Asset Estate Transfer Using Smart-Contract Validation
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Solution Overview
Problem
Existing methods fail to efficiently and securely transfer digital assets like cryptocurrencies and NFTs after the owner's death, risking loss or improper distribution due to the need for validation and collection of keys or passwords.
Innovation Solution
A Digital Directive system that allows users to create a Conveyance contract specifying asset distribution upon a life event, validating the event, authenticating assets, and transferring them to beneficiaries through custodial accounts or self-held assets.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If digital assets are stored using commercial crypto wallets or hardware wallets, then accessibility and security are improved, but the risk of loss or destruction increases, making recovery difficult
Solution Approach 1:
The system performs preliminary actions by creating encrypted copies of private keys and storing them in secure locations before the original key is lost or destroyed. This advance preparation ensures that even if the primary wallet or hardware device is lost, the assets can still be recovered through the backup keys stored in the distributed ledger system.
Solution Approach 2:
The patent introduces an intermediary layer between the user and the cryptocurrency assets. Instead of directly accessing assets through traditional wallets, the system uses smart contracts and distributed ledger technology as intermediaries that hold and manage the assets, allowing recovery through cryptographic proofs without direct access to the original private keys.
2Reliability
If traditional methods are used to transfer digital assets after death, then the process becomes complex requiring validation and collection of keys, but this increases the risk of improper distribution or loss
Solution Approach 1:
The system allows users to pre-configure their asset distribution preferences and designate beneficiaries before death. These preliminary arrangements are stored as smart contracts on the distributed ledger, automatically executing upon verification of the user's death, thereby eliminating the need for complex post-death key collection and validation processes.
Solution Approach 2:
The patent implements a self-service mechanism where the digital asset transfer process automates itself through smart contracts. The system automatically detects the user's death through oracles or designated contacts, validates the transfer conditions, and executes the asset distribution without requiring manual intervention from beneficiaries or estate administrators, thereby simplifying the process while ensuring reliability.
3Productivity
If digital assets are transferred without a structured system, then the transfer speed is fast, but the risk of loss or improper transfer increases
Solution Approach 1:
The patent introduces smart contracts as intermediaries that automatically enforce transfer conditions while maintaining fast execution speeds. The smart contracts act as trusted mediators that verify transfer conditions and execute asset transfers programmatically, eliminating the need for slow manual validation processes while ensuring security through cryptographic verification and automated enforcement of transfer rules.
Data Source
AI summary
Systems and methods for creating a Digital Directive and Conveyance contract to distribute digital assets, including cryptocurrency and NFTs are described. The systems and methods as described improve the digital asset owner's control over his digital assets and keys prior to distribution using one or more of guardians, custody partners and custodial accounts to facilitate the secure validation and transfer of digital assets at the behest of or upon the death of the owner.