Reserve-Backed Virtual Asset Conversion for Stable Crypto Transfers
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Solution Overview
Problem
Cryptocurrency's volatility, slow processing speed, and unfamiliarity to consumers hinder its widespread adoption as a means for transferring value or exchanging value for real-world goods and services, leading to high transaction costs and delays.
Innovation Solution
A system that allows for the instant conversion of cryptocurrency to virtual assets backed by a reserve of assets, enabling fast and low-cost transfers within a networked environment, where users can convert cryptocurrency to virtual assets like USD or gold, and transfer these assets instantly among users, while maintaining a reserve to stabilize value.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If cryptocurrency is used for value transfer, then transfer speed and cost are improved, but value stability deteriorates due to high volatility
Solution Approach 1:
The patent introduces virtual assets as an intermediary between cryptocurrency and traditional assets. Users convert volatile cryptocurrency into stable virtual assets backed by reserves, enabling fast transfers without direct exposure to cryptocurrency volatility. The virtual asset system acts as a mediator that decouples transfer speed benefits from value instability.
Solution Approach 2:
The system segments the value transfer process into distinct stages: cryptocurrency conversion to virtual assets, virtual asset transfer, and optional conversion back to traditional assets. This segmentation allows users to enjoy fast cryptocurrency transfers while maintaining stability through reserve-backed virtual assets, resolving the contradiction between speed and stability.
2Reliability
If cryptocurrency transfer validation is performed through decentralized network confirmation, then security and trust are improved, but transaction time increases significantly
Solution Approach 1:
The system performs preliminary conversion of cryptocurrency to virtual assets before transfers. Since virtual assets are already validated and backed by reserves, subsequent transfers occur instantly without requiring decentralized network confirmation for each transaction. The security validation happens upfront during the conversion process, not during every transfer.
Solution Approach 2:
The system creates virtual copies of asset value that can be transferred instantly without moving the actual cryptocurrency. These virtual asset representations enable rapid transfers while the underlying cryptocurrency remains secured in the decentralized network, separating the security function from the transfer function.
3Loss of energy
If cryptocurrency is adopted as a new currency system, then intermediary costs are reduced, but consumer familiarity and acceptance deteriorate
Solution Approach 1:
Virtual assets serve as an intermediary that bridges cryptocurrency and traditional familiar assets. Users can transfer value using cryptocurrency's low-cost infrastructure while holding and accounting for funds in familiar asset denominations (USD, EUR, etc.), making the system accessible to consumers without requiring them to understand or trust cryptocurrency directly.
Solution Approach 2:
The system provides multi-functionality by supporting both cryptocurrency and traditional asset denominations within the same platform. Users can choose to hold, transfer, and transact in whichever asset type is most appropriate for each transaction, combining the cost benefits of cryptocurrency with the familiarity of traditional assets.
Data Source
AI summary
A computer-based system converts cryptocurrency into a virtual asset. The system includes a user account database server configured to store data of a plurality of user accounts. The stored data pertains to each user account and indicates an accounting of obligations of the system to the user. The system also includes a cryptocurrency account server configured to receive, from a networked device of a user, a transfer of crypto currency, from an external cryptocurrency account. In response to receipt of such a transfer, the cryptocurrency account server is configured to update the data pertaining to the obligations of the system to the user. The system also includes a user interface server configured to receive a request from the user for conversion of cryptocurrency to an asset. In response to receipt of the request, the system updates the data pertaining to the user account of the user.