A Detailed Explanation of a Patent Application for a Multi-Level Hardware Wallet Transaction Method, Medium, and System for Digital Currency

A Detailed Explanation of a Patent Application for a Multi-Level Hardware Wallet Transaction Method, Medium, and System for Digital CurrencyOn December 21, 2024, the State Intellectual Property Office of China (SIPO) revealed that Shujin Public Service (Qingdao) Co., Ltd

A Detailed Explanation of a Patent Application for a Multi-Level Hardware Wallet Transaction Method, Medium, and System for Digital Currency

On December 21, 2024, the State Intellectual Property Office of China (SIPO) revealed that Shujin Public Service (Qingdao) Co., Ltd. and Digital Renminbi (Qingdao) Innovation Laboratory Co., Ltd. jointly filed a patent application titled "A Multi-Level Hardware Wallet Transaction Method, Medium, and System for Digital Currency," with publication number CN119151539A and an application date of November 2024. This patent application aims to enhance the security and efficiency of digital currency transactions, particularly offering innovative solutions for managing and processing transactions involving multi-level hardware wallets.

The patent abstract details the core technical scheme of this invention. Its primary objective is to address the inefficiencies and security risks inherent in existing digital currency transactions, especially those involving multiple hardware wallets. Traditional peer-to-peer aggregation methods become significantly less efficient when handling a large number of sub-wallets. This patent application proposes a multi-level hardware wallet transaction method that effectively solves this problem.

The core of this patent application lies in constructing a multi-level key management system to enhance security and improve transaction efficiency. The method primarily comprises the following steps:

I. Key Generation and Distribution:

First, the system derives a business group master wallet key for the hardware wallet group based on the People's Bank of China (Central Bank) key and the operating institution key. This master wallet key plays a crucial role in managing the creation, revocation, and validity period of all sub-keys. This hierarchical key management structure effectively isolates different levels of authority, enhancing system security. If a sub-wallet key is compromised, the entire system's security is not jeopardized because the master wallet key remains securely controlled. This represents a significant security improvement compared to traditional single-key management models. The master wallet key acts as a fortress, safeguarding the security of the entire digital currency transaction system.

II. Sub-Wallet Key Derivation and Writing:

Next, the system uses the master wallet key to derive multiple sub-wallet keys. These sub-wallet keys are written into various hardware wallet media, with each hardware wallet serving as an independent digital currency transaction terminal. This design ensures that each terminal possesses an independent key pair, preventing interference between them and further enhancing security. Each sub-wallet is like an independent camp, equipped with its own defense, while the master wallet key is the overall command center.

Simultaneously, a sub-hardware wallet program is written into the hardware wallet medium. This program includes two key functions: receiving payments and fund aggregation. The receiving function is responsible for receiving digital currency, while the fund aggregation function gathers funds dispersed across various sub-wallets into the master wallet, ensuring fund security and convenient management. The collaborative work of these two functions makes the entire system more efficient and secure.

III. Security Assurance during Transactions:

During transactions, the sub-wallet program first verifies the payer's certificate and the legitimacy of the transaction assets. Only after successful verification will the receiving operation be executed. To further enhance security, received assets are immediately destroyed, and new equivalent coins are created. These new coins are cryptographically locked using the public key of the master wallet key, ensuring that only the holder of the master wallet private key can unlock and use these funds. This mechanism effectively prevents fund theft and tampering. This is like establishing multiple layers of defense, securing funds at every level.

IV. Fund Aggregation Optimization Based on Simulated Annealing Algorithm:

When the number of sub-wallets is large, the traditional individual aggregation method is inefficient. To address this, the patent application proposes a fund aggregation scheme optimization method based on the simulated annealing algorithm. The simulated annealing algorithm can effectively find the global optimal solution, maximizing the efficiency of fund aggregation while ensuring security. This is like an efficient traffic management system that can quickly and orderly guide dispersed vehicles to their destinations, avoiding traffic congestion.

V. Summary of Technical Advantages:

In summary, the multi-level hardware wallet transaction method, medium, and system proposed in this patent application have several significant technical advantages:

• Enhanced Security: The multi-level key management system effectively isolates different levels of authority, reducing the risk of single points of failure.

• Improved Efficiency: The simulated annealing algorithm optimizes the fund aggregation scheme, effectively solving the inefficiency of traditional methods.

• Convenient Management: The master wallet key unifies the management of all sub-wallet keys, simplifying management and maintenance.

• High Reliability: Multiple security mechanisms ensure the safe and reliable execution of transactions.

The publication of this patent application marks another step forward in digital currency hardware wallet technology. It not only provides new safeguards for the security of digital currency but also lays a solid foundation for the widespread application of digital currency in the future. With further technological refinement and application, this technology is expected to play an increasingly important role in the digital currency field. We can expect this technology to better serve the development of the digital economy in the future.