UTXO-Based CBDC Token Issuance with Epoch Limits
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Solution Overview
Problem
Current central bank digital currencies (CBDCs) lack privacy in transactions, particularly for small amounts, and face system overload due to numerous small or mid-sized transactions, with existing technologies failing to provide complete privacy and stability.
Innovation Solution
An unspent-transaction-output (UTXO)-based privacy-preserving token system that determines epochs for digital cash issuance and limits token issuance, allowing peer-to-peer transactions for small amounts while ensuring large value transactions are validated on-chain, using zero-knowledge proofs to maintain user anonymity and prevent double spending.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If all transactions are validated on-chain to ensure privacy and prevent double spending, then transaction privacy and security are improved, but system overload and latency occur due to numerous small transactions
Solution Approach 1:
The patent segments transactions into two categories: small-value transactions processed off-chain using UTXO-based digital cash, and large-value transactions validated on-chain. This segmentation allows the system to handle high volumes of small transactions efficiently while maintaining security for significant transactions, thereby resolving the contradiction between transaction security and system throughput.
2Reliability
If digital cash tokens are issued without limits to enable privacy-preserving small transactions, then transaction privacy is improved, but system overload occurs due to unlimited transaction volumes
Solution Approach 1:
The patent implements periodic issuance of digital cash tokens through time-bound epochs with predefined maximum amounts. Each epoch resets the issuance limit, creating a periodic cycle that maintains user privacy for small transactions while preventing system overload through controlled token supply. This periodic limitation resolves the contradiction between privacy preservation and system capacity.
3Ease of operation
If digital cash tokens are issued without limits to enable peer-to-peer transactions, then ease of operation is improved, but system stability deteriorates due to potential overload
Solution Approach 1:
The patent establishes preliminary issuance limits and epoch-based constraints before digital cash tokens are circulated. By pre-defining maximum issuance amounts and time boundaries, the system enables convenient peer-to-peer transactions while maintaining stability through预先 set controls that prevent overload scenarios.
4Loss of information
If complete privacy is implemented for all transactions, then user anonymity is improved, but traceability for taxation and governance is reduced
Solution Approach 1:
The patent applies different privacy levels to different transaction types: small-value transactions receive full privacy protection through UTXO-based digital cash, while large-value transactions maintain traceability through on-chain validation. This local differentiation of privacy quality allows the system to protect user anonymity for everyday transactions while preserving taxation and governance capabilities for significant transactions.
Data Source
AI summary
Extending an unspent-transaction-output-(UTXO)-based privacy-preserving token system to enable digital cash functionalities and privacy-preserving limit enforcement includes determining, by a central instance system, epochs of time-wise equally long and adjacent time periods, issuing, by the central instance system, digital cash tokens relating to a user-identifier, and storing a sum number of the issued digital cash tokens in an actual epoch relating to the user-identifier, preventing, by the central instance system, an issuing of digital cash tokens larger than a predefined maximum number of digital cash tokens relating to the user-identifier in the actual epoch, and resetting, by the central instance system, the sum number of issued tokens in the actual epoch at an end of the epoch.