Smart Contract Hash Lock for Distributed Ledger COD
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Solution Overview
Problem
Current distributed ledger systems lack a mechanism for implementing 'cash on delivery' (COD) type transactions, which is essential for ensuring payment security and trust between merchants and consumers, as they rely on a two-phase process that is not applicable in these ecosystems.
Innovation Solution
The method involves using smart contracts on a distributed ledger network, where transactions are locked by hash lock conditions that require matching hashes generated from a contactless payment device, ensuring that payments are only released upon successful authentication, mimicking the escrow mechanism of traditional card payment systems.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If distributed ledger transactions use conventional two-phase payment process (Authorization and Capture), then payment security and trust are improved, but the mechanism cannot be implemented in distributed ledger ecosystems
Solution Approach 1:
The patent introduces a smart contract as an intermediary on the distributed ledger that mimics the escrow mechanism of conventional payment systems. The smart contract holds funds in a locked state and releases them only when hash lock conditions are satisfied, thereby mediating between the payer and payee without requiring traditional bank infrastructure.
Solution Approach 2:
The patent changes the state parameters of the transaction by using hash lock conditions. The transaction is locked with a specific hash value, and funds are released only when a matching hash is provided. This parameter-based locking and unlocking mechanism adapts the conventional two-phase payment process to distributed ledger technology.
2Adaptability or versatility
If transactions are locked by hash lock conditions requiring matching hashes, then COD-type mechanism is enabled, but device complexity increases
Solution Approach 1:
The system uses self-service automation where the smart contract automatically locks and unlocks transactions based on hash match conditions without requiring manual intervention. The contactless payment device automatically generates hashes and the system automatically verifies them, reducing operational complexity despite the sophisticated underlying mechanism.
Solution Approach 2:
The patent replaces manual escrow mechanisms with cryptographic hash-based automatic locking and unlocking. Instead of manual verification and fund release processes, the system uses cryptographic hash matching to automatically control transaction states, reducing operational complexity while maintaining security.
Data Source
AI summary
Disclosed is a method of releasing a locked transaction encoded in a smart contract on a distributed ledger network. The locked transaction is locked by at least one hash lock condition requiring matching to a hash. The method involves: receiving entry of a passcode associated with the locked transaction: transmitting a request to generate a first hash to a contactless payment device and receiving the first hash from that device; generating a second hash based on the first hash and transaction-specific data; and transmitting an unlock request comprising the second hash and an address of the smart contract on the distributed ledger network, to a node of that network. The unlock request causes the smart contract to release the locked transaction on matching of the second hash against the hash of the hash lock condition.