SYSTEM AND METHOD FOR GENERATING AND DISTRIBUTING

REGULATED DIGITAL CURRENCY

TECHNICAL FIELD

[001] Embodiments are generally related to electronic transaction and Payment systems and methods. Embodiments are also related to electronic currency generation and distribution. Embodiments are particularly related to systems and methods for generating digital currency units within any regulated environment and further associating ownership data with the units for secured distribution.

BACKGROUND OF THE INVENTION

[002] Traditionally, financial transaction involves exchange of money as consideration for goods and services received. There are various forms such as Currency, Cheques, Demand Drafts, Money Orders etc., by which the money is exchanged in a transaction.

[003] Currency is defined as "Money in the form of metal or paper medium of exchange that is in current use in a particular country". Currency issued by respective governments or Central banks is known as official currency of a country. Government or Central banks, as the case maybe, across the globe act as governing bodies in their territories to control the generation and distribution of currency for enabling transactional payment systems.

[004] With the advent of modern computer science and internet, the mode of exchange of money in financial transactions have been redefined and new methods including online banking, mobile wallets and crypto currencies have

been introduced to represent money and further to facilitate a financial transaction. In all of the above mentioned transaction modes money is termed as "electronic currency or money" representing value of money held in an account maintained with a third party.

[005] Prior art systems and methods for generating and transacting electronic money between the parties are well known in the art. Some prior art systems and methods refer to a digital account transfer request from a user along with a transaction code and thereby transfer the digital account balance to the payee based on the transaction code validation by a centralized digital transaction server. Other prior art systems use a transaction verification unit for cross verification of a digital transaction request and thereby enable the transaction between the parties in the transaction network. In another embodiment of the prior art the balance is loaded into a transaction wallet and the digital balance in the wallet is transferred between the parties in the system.

[006] However all these prior art transaction systems have a number of limitations. Foremost is the limited interoperability. The user accounts and balances are controlled by multiple third party providers. Thus there is no single window of operations for a user having electronic money balances spread across multiple third party providers. Unlike regulated physical currency which is owned and possessed directly by the user and universally accepted within the governing territories, the electronic currency/ money referred in the prior art systems are controlled by third party providers and vulnerable to system manipulation, operational frauds or errors. Also, the prior art systems and methods are only able to hold the electronic account balance of a user in a secured way and do not provide any embodiment of the electronic money unit

to the user unlike a physical currency. Therefore the prior art systems and methods are highly prone to fraudulent transactions and processing. Furthermore, the prior art systems are unable to effectively identify the unauthorized transactions which can happen due to loss of login credentials and transaction credentials of the user in the system. Also, the prior art systems rely on multiple intermediaries for validating the transactions and securing the electronic account balances leading to increase in cost and delay in settlement.

[007] Some prior art systems for generation of Digital Assets are well known in the art. Other Prior art systems for holding the Digital Assets are also known in the art. However, these prior art for generating digital assets in general form and holding the assets necessarily depends on certain simple user credentials for accessing and transacting with the digital assets leading to security challenges if the credentials are compromised.

[008] Based on the foregoing, it is believed that a need exists for an improved system and method for generation of well-defined digital currency in particular that allows regulating authorities to control the generation of digital currency and distribution of digital currency which allows for better security without reliance on third party intermediaries, faster settlement time and lower cost for transaction processing. A need also exists for creating a digital currency with similar life cycle and transaction characteristics as physical currency for issuance by government and central bank. A need also exists for an innovative administration solution providing a controlled mechanism for generating currency units within the transaction ecosystem, as described in detail herein.

SUMMARY OF THE INVENTION

[009] The following summary is provided to facilitate an understanding of some of the innovative features unique to the disclosed embodiment and is not intended to be a full description. A full appreciation of the various aspects of the embodiments disclosed herein can be gained by taking the entire specification, claims, drawings, and abstract as a whole.

[0010] Therefore, one aspect of the disclosed embodiment is to provide for an innovative system and method for generation and distribution of digital currency within any regulated environment and further associating ownership data with the units for secured distribution to be used in a transaction ecosystem.

[0011] It is another aspect of the disclosed embodiment to provide a solution with a controlled mechanism for generating micro currency units (Mu) resembling the process currently adopted by the government or central banks, as the case maybe, to print and manage physical currencies,

[0012] It is further aspect of the disclosed embodiment to provide for a method for assigning ownership with respect to the micro currency units (Mu) to users in the network. For ensuring proper control in generating the digital currency and easy distribution of such generated currency without any security flaws, the digital currency and the users within the system are digitally defined to hold certain specific data which is further processed to associate both the digital currency and respective users who own the digital currency at a given point of time. Techniques and processes used in the system allows for transferring ownership of micro currency units (Mu) for the purpose of exchange of money. The digital currency's critical information .such as private key is securely stored in a secure hardware element as is the ownership data of the owner holding the right over the currency making it very secured and easy to transact.

[0013] The aforementioned aspects and other objectives and advantages can now be achieved through a system and method for generation and secured distribution of digital currency by providing a controlled mechanism for generating micro currency units (Mu) and associating the units with the current owners as described herein. The system include a well-structured micro currency unit (Mu), a well-structured registered identifier (R), micro currency unit generation and processing system (MUGPS), a registered identifier generation system (RIGS), a query repository service (QRS), and a micro currency unit ownership transfer processor (MOTP).

[0014] The micro currency unit Mu is a uniquely structured currency unit in digital form. Mu is structured to address the ultimate objective of associating the ownership information and also to include the details about the MOTP address reference. For security through the life cycle the critical information of the Mu such as Private Key and Ownership information is held in a regulated environment in a secured hardware element

[0015] The Registered Identifier (R) is a uniquely structured user in digital form. R is designed to hold information with respect to the user in the system including, but not limited to, user information, unique system number, user public key, user signed public key and registration authority signature. The identity of the registered digital identifiers (R) is used for validation during ownership transfer and transactions using the micro currency units (Mu).

[0016] The MUGPS is an administration system providing a controlled mechanism to generate micro currency units (Mu) in the ecosystem. The minting of the micro currency units (Mu) in the system can be restricted and controlled by the issuing authorities such as Government or Central Banks by having operation controls and access controls over the private keys of the issuers, thereby providing a secure environment wherein the micro currency units (Mu) cannot be generated without issuers consent and generated micro currency units cannot be modified by any means.
[0017] The RIGS is used for registration of transacting users by creating a registered identifier (R) for the user in the system. The system contains sets of registration authorities which validates the incoming registration requests and creates the registered digital identifiers (R). In this process the RIGS interfaces with external third party systems to validate user provided information. The system further prohibits the modification of the registered digital identifiers (R) thereby creating a secured transaction environment.

[0018] The Query Repository System (QRS) is the repository of the micro currency units (Mu) and registered identifiers (R)in the system. The QRS handles retrieval of (Mu) and (R) based on various search criteria including serial number and trace number. The QRS provides the public keys of the issuers of (Mu) and R which is used in the validation process for verifying the genuineness of the Muand respective R at real-time. The linked Micro Currency Unit Transfer Processor (MOTP) information of the micro currency unit (Mu) is provided by the QRS.

[0019] Function of Micro Currency Unit Ownership Transfer Processor

(MOTP) is to associate a Micro Currency Unit Mu with a user claiming ownership after validating the request data from the claimant and the transfer authorization data provided by the current owner to the claimant. For providing ultimate security and swiftness multiple MOTPs are provided. The ownership of the micro currency units (Mu) in the system can be assigned to the registered users by recording a transfer request at the ownership transfer processor. The ownership transfer processor can further record the ownership of the micro currency units (Mu) to the requesting user by using the cryptographic operations of the system. The registered users in the system can request for the ownership of the micro currency units (Mu) using a communication device including, but not limited, to a smartphone, a mobile phone, a personal computer and/or a server. The proposed system and method can be a highly secured and optimized solution for effective transaction of micro currency units (Mu) between the users in the ecosystem.

[0020] Thus the system for generation and distribution of the digital currency is an end-to-end digital currency system comprising of uniquely structured micro currency unit, a unique way for associating owners to the micro currency unit, a controlled mechanism for issuance of micro currency unit, a secured way for distribution of the currency unit and a secured way for registering users. The system and method can be effectively used for association of digital currency to users and facilitating transfer of digital currency between users in the network. The micro currency units (Mu) can be created by including the micro currency unit related information such as, but not limited to, the value of the unit and serial number. The micro currency units {Mu) are digitally signed by a set of issuing authorities using which transaction users R and processors MOTP can validate the authenticity of the units in transaction.

BRIEF DESCRIPTION OF THE DRAWINGS

[0021] The accompanying figures, in which like reference numerals refer to identical or functionally-similar elements throughout the separate views and which are incorporated in and form a part of the specification, further illustrate the present invention and, together with the detailed description of the invention, serve to explain the principles of the present invention.

[0022] FIG. 1 illustrates a schematic block diagram of the overall system showing the interaction between various modules used for generation and distribution of the micro currency units (Mu) to the registered users of the transaction ecosystem,, in accordance with the disclosed embodiments;

[0023] FIG. 2 illustrates a graphic representation of the structure of the micro currency unit (Mu) and the components of the micro currency units (Mu), in accordance with the disclosed embodiments;

[0024] FIG. 3 illustrates a graphic representation of the structure of the registered identifiers (R) in the system, in accordance with the disclosed embodiments;

[0025] FIG. 4 illustrates a sequence flow diagram describing the processing of ownership transfer of various micro currency units to registered identifiers in the ecosystem by designated micro currency ownership transfer processors (MOTP), in accordance with the disclosed embodiments; and

[0026] FIG. 5 illustrates a block diagram of the micro currency unit ownership transfer processor (MOTP) of the system, in accordance with the disclosed embodiments.

DETAILED DESCRIPTION

[0027] The particular values and configurations discussed in these non-limiting examples can be varied and are cited merely to illustrate at least one embodiment and are not intended to limit the scope thereof.

[0028] The embodiments now will be described more fully hereinafter with reference to the accompanying drawings, in which illustrative embodiments of the invention are shown. The embodiments disclosed herein can be embodied in many different forms and should not be construed as limited to the embodiments set forth herein; rather, these embodiments are provided so that this disclosure will be thorough and complete, and will fully convey the scope of the invention to those skilled in the art. Like numbers refer to like elements throughout. As used herein, the term "and/or" includes any and all combinations of one or more of the associated listed items.

[0029] The terminology used herein is for the purpose of describing particular embodiments and is not intended to be limiting of the invention. As used herein, the singular forms "a", "an" and "the" are intended to include the plural forms as well, unless the context clearly indicates otherwise. It will be further understood that the terms "comprises" and/or "comprising," when used in this specification, specify the presence of stated features, integers, steps, operations, elements, and/or components, but do not preclude the presence or addition of one or more other features, integers, steps, operations, elements, components, and/or groups thereof.

[0030] Unless otherwise defined, all terms (including technical and scientific. terms) used herein have the same meaning as commonly understood by one of ordinary skill in the art to which this invention belongs. It will be further understood that terms, such as those defined in commonly used dictionaries, should be interpreted as having a meaning that is consistent with their meaning in the context of the relevant art and will not be interpreted in an idealized or overly formal sense unless expressly so defined herein.

[0031] FIG. 1 illustrates a schematic block diagram of the system 100 for generation and distribution of the micro currency units (Mu) to the registered users in the transaction ecosystem, in accordance with the disclosed embodiments. The system 100 provides a controlled mechanism for generating micro currency units (Mu) within the network. The system 100 includes a micro currency unit (Mu) generation and processing system (MUGPS) 200, a query repository service (QRS) 300, a registered identifier generation system (RIGS) 400 and, a micro currency unit ownership transfer processor (MOTP) 500. The micro currency units (Mu) 700 and a registered identifier (R) 600 represent a group of Micro Currency Units and Registered Users which have been generated by MUGPS and RIGS and distributed in the transaction ecosystem.

[0032] FIG. 2 illustrates a graphic representation 800 illustrating the structure of the micro currency unit (Mu) and the components of the micro currency units (Mu)9 in accordance with the disclosed embodiments. The micro currency units (Mu) can be of formatted structure containing data consisting of user readable data, system assigned sequence trace number, cryptographic data and computed cryptographic structures which make the complete data in the defined order as a self-attested and system authorized data.

[0033] The micro currency units (Mu) represent a digital unit which can be verified using digital signatures embossed in its structure, thus making it a complete authenticated identity. In the present context, the micro currency unit (Mu) represents a currency unit bearing value, serial number referred as trace number and signature of the issuer of the currency. Misrepresents a unit whose trace number is X. Mua represents the trace number of the unit, PUMUX is the public key of the unit, PTMUX is the private key of the unit, Dmux is not part of the structure of the unit, but the cryptographic digest value on the unit's data structure Mux.

[0034] URDMUX represents plain textual data acting as user readable data. URDMUX can be compared to the text printed on a paper currency. Finally OWmux is the critical component which is dynamic in nature and is not associated with the life cycle generation of the unit. OWMUX refers to the ownership derivative data which is irreversible and non-self-informative by itself.

[0035] The MUGPS 200 is an administered interface providing a controlled mechanism to generate micro currency units (symbolized as Mu) in the ecosystem 100. MUGPS 200 consist sets of processes to create uniquely identifiable micro currency units containing information on the denomination and serial number of the micro currency units. Additional cryptographic processes are used to enable the micro currency unit (Mu) to be considered as a valid digital unit/digital currency for usage by the users and systems participating in the system 100. To implement the controlled administered cryptographic processes, MUGPS 200 possesses set of authority signers which uses its private keys to compute sequential digital signatures which becomes part of the generated micro currency units (Mu) file structure. The MUGPS 200

also have provision to protect the access and operation of authority signer's private key using sets of authorization processes and by usage of tamper proof hardware devices for protection of sensitive cryptographic keys. The micro currency unit's (Mu) life cycle in MUGPS 200 ends with the attachment of authorities' signatures to the micro currency units (Mu) data, post which the micro currency unit (Mu) structured data is transferred to the QRS 300 and the sensitive information such as private key and ownership information is transferred to the MOTP unit 500.

[0036] FIG. 3 illustrates a graphic representation 850 of the structure of the registered identifiers (R) in the system 100, in accordance with the disclosed embodiments. A registered identifier is a formatted structure containing data consisting of user readable data, system assigned sequence trace number, cryptographic data and computed cryptographic structures which make the complete data in the defined order as a self-attested and system authorized data. R can be verified using digital signatures embossed in its structure, thus making it a complete authenticated identity.

[0037] In the context of the digital currency system, R represents a digital identity of a user/system which can make an ownership claim over micro currency unit (Mu) or transfer the ownership of a possessed (Mu) to another R. RTN represents the serial number/system generated unique trace number assigned to the identity. PURN is the public key of the identity. PTRN is the private key of identity. Dm is not part of the structure of identity RN, but is the cryptographic digest computed over the complete structure. URDRN is the user readable string embossed in the structure. In context of the ecosystem, URDRN may contain the real world name, other demographic information of the user to whom the identity is issued to.

[0038] The structured data provides enough information and evidence for validating the structured data with respect to the user as well as the authorization provided by the system 100 ensuring the user denoted by the R 600 is valid and has the authorization to perform transaction in the ecosystem over the micro currency units (Mu).

[0039] The RIGS 400 is used for registration of transacting users by creating a registered identifier (R) for the user in the system 100. The RIGS 400 consists of an administrative controlled mechanism to validate user request to generate R. This is done using sets of cryptographic validations such as verification of the User's public key and associating the users demographic information. On completion of generation of a RID, it is transferred to the QRS 300. The life cycle of format structure of registered user ends with its creation by the system.

[0040] The QRS unit 300 of the system 100 manages the repository of the micro currency units and registered identifiers in the system 100. The QRS facilitates in transaction validation by providing micro currency unit and registered user information to the MOTP. The QRS handles retrieval of (Mu) and (R) based on various search criteria including serial number and trace number. The QRS provides the public keys of the issuers of (Mu) and R which is used in the validation process for verifying the genuineness of the Mu and respective R at real-time. The linked Micro Currency Unit Transfer Processor (MOTP) information of the micro currency unit (Mu) is provided by the QRS

[0041] FIG. 4 illustrates a sequence flow diagram 900 describing the

processing of ownership transfer of various micro currency units (Mu) to the registered identifiers (R) in the transaction ecosystem by micro currency ownership transfer processor (MOTP), in accordance with the disclosed embodiments. The designated micro currency unit transaction processors (MOTP 501) referred as mupx-y where mupioi-200 represents a mup which can process the ownership transfer request for the range of micro currency units (Mu) whose sequence (trace number) are between 101 to 200 i.e. Muwi - Mu2oo-Hence mupwi-200 have authorization to update and manage ownership data Mu's in {Muwi, Mu2oo). The block RA represents the current owner of Muioi transferring the ownership of MUJOI to RB, the action is followed by RB transmitting a claim request to assigned processor of Muioi, the mupwi-200.

[0042] A user RA who claims to be the current owner of a micro currency unit Mux can prove it by providing sets of data which is applied to an algorithm in conjunction with the micro currency unit digital identity data. If the output data computed by the algorithm is equal to the current value of OWMUX, it is termed as a valid proof of possession. This also implies that RA can have set of information which could alter the value of OWMUX in association with unit's associated processor.
[0043] A RA cannot alter the value of OWMUX which is derived and modified because of a previous action performed by it. In the context of a digital currency system, it implies that an entity cannot perform double spending on the currency it owned. OWMUX is not part of the core structure of Mux but it refers to a cryptographic computed derivation data which can be used to validate a digital identity R claiming ownership over micro currency unit Mu

[0044] The MOTP unit 500 stores sensitive information of the micro currency unit such as the ownership information and the private key. It also processes the request for ownership transfer by R by means of validating the current ownership associated with the micro currency unit and cryptographically validating the transfer request and committing the change in ownership to the new claimant. In this process it also validates the digital identities of the claimant and transferor. Every issued micro currency unit (Mu) by the MUGPS 200 also contains the address reference for the assigned ownership processor associated with the generated micro currency units (Mu). The system representing a registered identifier (R) reads the embossed address reference of processor in (Mu) and communicates with the addressed MOTP 501 with a claim request over the micro currency unit (Mu). More details of the MOTP is given in Figure 5.

[0045] FIG. 5 illustrates a block diagram of the micro currency unit ownership transfer processor (MOTP) 501 in accordance with the disclosed embodiments. The micro currency unit ownership transfer processor MOTP 501 (also referred as MUP in the previous sections) provides interfaces for R's to act on set of Mu's that the MOTP is assigned to for processing ownership transfer requests. Each MOTP processes requests for sets of distinct Mu!s in the ecosystem. The MOTP 501 includes ICCs 502 which are microchip interfaces supporting communication using ISO 7816 command response pair in T=l communication protocol. The ICCs 502 stores the current ownership derivation data of sets of micro currency units in its tamper proof hardware layer.

[0046] The ICCs 502 contains sets of micro currency units along with the associated private keys and ownership datum. ICC 502 uses the associated,

private keys to compute and update the ownership data after the defined validations are passed. TRQP (Transaction request queue processor) 503 is an internal software component managing the queue of incoming request to validate claim over ownership or to change the ownership.

[0047] PVP 504 is the pre validation processor module which tries to accomplish the process of pre verification of request using the data available in cache memory and by using the keys available in the LPHSM 505. This implies that PVP 504 filters the request which is needed to be forwarded to an ICC chip 502. LPHSM 505 is local processing HSM, an HSM device for storing and processing of the MUP (MOTP) 501 private keys. LPHSM 505 also contains the public keys of the micro currency unit issuers and the registered identifier issuers, enabling the system to validate an incoming request embedded with the identities with cryptographic signatures by respective identity issuers.

[0048] SEGT 506 is a software/hardware module for interfacing with the TCC 502 in the array of ICCs 502 for reading, requesting updating of ownership derived data. This interface is also used for secure loading of the micro currency units with private key in the ICC 502. The CM 507 is the cache memory acting as the temporary memory, this is used for having a reference of the last updated ownership derivative data which could assist the pre validation processor to apply pre filter thereby reducing the number of access made to ICCs 502.

[0049] QRS Interface 508 is a software module having the ability to query the QRS 300 system to fetch R or Mu using the respective trace identifiers/sequence numbers. This process could be required by the system components for validation of request or processing of requests. SMDL 509 is

the module responsible to load the micro currency unit to one of the ICC 502 it the ICC array in a secure mode. NVM 510 is nonvolatile memory of the MUI for storage of configuration settings etc. SEMAP 511 is secure element am micro currency unit mapper system. It is responsible to provide mapping t< other components with the information pertaining to the micro currency uni with which a trace number is configured in to the ICC 502 of the ICC array.

[0050] The system 100 for generation and transaction of the digital currency proposed herein is an end-to-end digital currency system comprising o Issuance of micro currency units (Mu), registration of transacting users R allocation of micro currency units (Mu) to MOTP and providing owners hi} association of the issued (Mu) to the registered users R. The system anc method can be effectively used for association of digital currency units to user; and facilitating transfer of digital currency between users in the network. Th< micro currency units (Mu) can be created by including the micro currency uni related information including, but not limited to, the value of the unit, seria number and digital signature of the issuer of the currency. The MOTP stores valuable and sensitive micro currency unit information in a secured hardware element.

[0051] The micro currency units (MJ are provided with the set of digita signatures by the issuing authorities through which transaction users R anc processors MOTP can validate the authenticity of the micro currency units (MUi in transaction by using the public keys of the issuers and applying the digita signature validation process algorithm over the structure of the identity (MJ The minting of the micro currency units (Mu) in the system is restricted anc controlled by the issuing authority thereby ensuring protection against counterfeit micro currency units (Mu) issuance.

[0052] The registered digital identifiers (R) with respect to the users in the system can be created with the information including, but not limited to, user information, unique system number, user public key, user signed public key and registration authority signature. The identity of the registered digital identifiers (R) can be validated in order to enable authorized transactions over the micro currency units (Mu).

[0053] The micro currency ownership transfer processor (MOTP) re-computes the ownership derivate data of the micro currency units (Mu) using the new owner's cryptographic identity request data to bind the micro currency unit to the owner. The proposed system and method can be a highly secured and optimized solution for effective transaction of micro currency units (Mu) between the users in the monetary ecosystem. The registered users in the system can request for the ownership of the micro currency units (Mu) using a mobile communication device including, but not limited, to a smartphone, a mobile phone, a personal computer and/or a server.

[0054] Overall the system 100 is a linked system requiring all the modules mentioned above to work in conjunction to generate micro currency units and allow for association of ownership of registered user to micro currency units.

[0055] It will be appreciated that variations of the above-disclosed and other features and functions, or alternatives thereof, may be desirably combined into many other different systems or applications. Also that various presently unforeseen or unanticipated alternatives, modifications, variations or improvements therein may be subsequently made by those skilled in the art which are also intended to be encompassed by the following claims.

CLAIMS

I/We Claim:

1 A system for generation and distribution of currency in digital form within a monetary ecosystem called Micro currency Unit Generation and Processing System (MUGPS) for providing an administered interface and a controlled mechanism to generate micro currency units (Mu)

2 A system for creating Registered Identifiers called Registered Identifier Generation System (RIGS) for registration of users

3 A system for transferring the ownership of micro currency units Mu from one user to another user called Micro currency unit Ownership Transfer Processor (MOTP) to control and authorize the ownership association of registered users R created by RIGS to micro currency units generated by MUGPS in a hardware secured element.

4 A sub-system for storing and retrieving the critical information of the micro currency units (Mu) and registered identifiers (R) called Query Repository Service (QRS) used in real time validation of the authenticity of micro currency units (Mu)

5 A method of claim 1 for minting or generating micro currency units (Mu) by a issuing authority wherein the structure of micro currency units (Mu) comprises of its own private key, ownership information and associated transaction processor in addition to currency related information including, but not limited to, the value of the unit and serial number

6 The method of claim 1 wherein the micro currency units (Mu) can be digitally signed by the issuing authorities through which the digital identity with respect to the micro currency units (Mu) can be verified using the issuers embossed digital signature in the micro currency units (Mu).

7 A method of claim 2 for creating users as Registered Identifiers (R) wherein the structure of R comprises of unique system number, user public key, user signed public key and registration authority signature in addition to information including, but not limited to, user information, demographic information and cryptographically validated information

8 The method of claim 3 assigning the ownership of micro currency units (Mu) by the micro currency ownership transfer processor (MOTP) which re-computes the ownership derivative data Owx using the function of the claim request and further stores it in the assigned secure element making the change irreversible.

9 The method of claim 3 further comprising controlled ownership transfer wherein claim request binds the data of the current owner and the new owner, allowing only the designated claimant to initiate the claim request.

10 The method of claim 3 wherein the registered users can request for the ownership of the micro currency units (Mu) using a communication device including, but not limited, to a smartphone, a mobile phone, a personal computer and/or a server.