Virtual Currency System Using Distributed Ledger for Direct Transactions
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Solution Overview
Problem
Conventional ecommerce systems lack the attributes of direct transmission and irreversibility present in traditional face-to-face cash transactions, leading to increased transaction costs and risks for merchants due to the involvement of financial intermediaries, which restricts product offerings and customer experience.
Innovation Solution
A system implementing a virtual currency with a decentralized network of computing devices that enables direct, irreversible transactions between users without a central authority, using a virtual currency mint to create and manage units of currency and a distributed hash table for transaction validation and storage.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If conventional ecommerce systems use financial intermediaries to process transactions, then price stability and liquidity are maintained, but direct transmission and irreversibility are lost
Solution Approach 1:
The patent extracts and removes the financial intermediary from the transaction process. The distributed ledger technology enables direct peer-to-peer transactions between users without banks or payment processors, eliminating the third-party validation requirement while maintaining transaction reliability through cryptographic verification and consensus mechanisms.
Solution Approach 2:
The system enables users to independently validate and execute transactions without external intermediaries. Each participant in the distributed network maintains a copy of the ledger and independently verifies transactions through cryptographic proofs, allowing the system to self-validate without relying on centralized financial institutions.
2Reliability
If financial intermediaries are involved in ecommerce transactions, then transaction validation is ensured, but transaction costs increase and irreversibility is lost
Solution Approach 1:
The patent removes the financial intermediary layer that imposes transaction fees. By using distributed ledger technology with cryptographic verification, the system validates transactions peer-to-peer without requiring banks or payment processors to charge fees for their services.
Solution Approach 2:
Participants in the distributed network independently validate transactions using cryptographic algorithms and consensus mechanisms built into the protocol. This self-validation eliminates the need to pay external validators or intermediaries, reducing transaction costs to minimal network maintenance fees.
3Reliability
If traditional cash transaction attributes are applied to ecommerce, then irreversibility is achieved, but the need for intermediaries cannot be eliminated
Solution Approach 1:
The patent replaces the mechanical intermediary infrastructure (banks, payment processors, clearinghouses) with a cryptographic system based on distributed ledger technology. Irreversibility is achieved through cryptographic finality and consensus mechanisms rather than through centralized authority control, eliminating the need for complex intermediary organizations.
4Reliability
If centralized authorities are used to validate transactions, then trust is established, but direct transmission between users is blocked
Solution Approach 1:
The patent extracts the trust-validation function from centralized authorities and distributes it across the network participants. Each user runs their own validation node, maintaining cryptographic copies of the ledger and independently verifying transactions, thereby eliminating the need for centralized trust while enabling direct peer-to-peer transmission.
Solution Approach 2:
Each participant in the distributed network performs their own transaction validation using cryptographic verification and consensus protocols. Users independently establish trust through mathematical proofs rather than relying on centralized authorities, enabling direct transmission without intermediary control.
Data Source
AI summary
A system including a network connected to at least one mint computing device implementing a virtual currency mint. The network has a ring topology and includes computing devices that implement a plurality of nodes. The mint issues units of virtual currency to user accounts implemented by the nodes. Each of at least a portion of the nodes is configured to initiate (as a sender node) a transaction with a recipient node that transfers at least one unit of the virtual currency from a sender one of the user accounts to a recipient one of the user accounts. The recipient node validates the transaction, creates a receipt, performs an operation on the receipt to identify a storage node, and routes the receipt to the storage node. The storage node stores the receipt, identifies next storage nodes, and routes copies of the receipt to the next storage nodes for storage thereby.