U.S. patent application number 17/451654 was filed with the patent office on 2022-02-24 for stable cryptocurrency coinage.
This patent application is currently assigned to Inveniam Capital Partners, Inc.. The applicant listed for this patent is Inveniam Capital Partners, Inc.. Invention is credited to Brian Deery, Gavin Gillas, Paul Snow.
Application Number | 20220058623 17/451654 |
Document ID | / |
Family ID | 1000005929404 |
Filed Date | 2022-02-24 |
United States Patent
Application |
20220058623 |
Kind Code |
A1 |
Snow; Paul ; et al. |
February 24, 2022 |
Stable Cryptocurrency Coinage
Abstract
A two-coin mechanism for maintaining a stable value of
cryptographic coinage traded in a decentralized market exchange
without requiring a reserve. A pegged cryptographic token and a
variable-priced cryptographic token are both traded in the
reserveless decentralized market exchange. The pegged cryptographic
token and the variable-priced cryptographic token are value related
based on a cryptographic exchange rate. Whenever a market
transaction is processed (such as a buy or sell order), at least
one of a destruction operation and a creation operation are
performed. The destruction operation destroys at least one of the
pegged cryptographic token and/or the variable-priced cryptographic
token, while the creation operation creates new ones of the pegged
cryptographic token and/or the variable-priced cryptographic token.
The two-coin mechanism thus implements a decentralized and
algorithmic monetary policy that removes and/or deposits
cryptographic tokens to/from the reserveless decentralized market
exchange to alter supply and to maintain stable coinage values.
Inventors: |
Snow; Paul; (Austin, TX)
; Deery; Brian; (Austin, TX) ; Gillas; Gavin;
(Austin, TX) |
|
Applicant: |
Name |
City |
State |
Country |
Type |
Inveniam Capital Partners, Inc. |
New York |
NY |
US |
|
|
Assignee: |
Inveniam Capital Partners,
Inc.
New York
NY
|
Family ID: |
1000005929404 |
Appl. No.: |
17/451654 |
Filed: |
October 21, 2021 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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16191574 |
Nov 15, 2018 |
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17451654 |
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62714909 |
Aug 6, 2018 |
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62714911 |
Aug 6, 2018 |
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62723595 |
Aug 28, 2018 |
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Current U.S.
Class: |
1/1 |
Current CPC
Class: |
G06Q 20/3678 20130101;
G06Q 20/0655 20130101; G06Q 20/3672 20130101 |
International
Class: |
G06Q 20/36 20060101
G06Q020/36; G06Q 20/06 20060101 G06Q020/06 |
Claims
1. A memory device storing instructions that when executed cause a
hardware processor to perform operations, the operations
comprising: receiving cryptographic coinage transactions conducted
by computers via a network, the cryptographic coinage transactions
associated with a two-coin mechanism having a pegged cryptographic
coin and a variable-priced cryptographic coin; monitoring a supply
and a value of the pegged cryptographic coin and the
variable-priced cryptographic coin; adjusting the value of the
pegged cryptographic coin and the variable-priced cryptographic
coin by performing a destruction operation that destroys the pegged
cryptographic coin; and adjusting the value of the pegged
cryptographic coin and the variable-priced cryptographic coin by
performing a creation operation that creates and deposits new ones
of the variable-priced cryptographic coin; wherein the destruction
operation and the creation operation maintain a stability of the
value of the pegged cryptographic coin.
2. The memory device of claim 1, wherein the operations further
comprise storing any of the cryptographic coinage transactions in
electronic association with the destruction operation.
3. The memory device of claim 1, wherein the operations further
comprise monitoring the supply of the pegged cryptographic
coin.
4. The memory device of claim 1, wherein the operations further
comprise monitoring the supply of the variable-priced cryptographic
coin.
5. The memory device of claim 1, wherein the operations further
comprise logging the destruction operation.
6. The memory device of claim 1, wherein the operations further
comprise logging the creation operation.
Description
CROSS-REFERENCE TO RELATED APPLICATIONS
[0001] This patent application is a divisional filing of U.S.
application Ser. No. 16/191,574 filed Nov. 15, 2018, since issued
as U.S. Patent X, which claimed domestic benefit of U.S.
Provisional Application No. 62/723,595 filed Aug. 28, 2018, claimed
domestic benefit of U.S. Provisional Application No. 62/714,909
filed Aug. 6, 2018, and claimed domestic benefit of U.S.
Provisional Application No. 62/714,911 filed Aug. 6, 2018, with all
these patent applications incorporated herein by reference in their
entireties.
BACKGROUND
[0002] Cryptographic coinage and blockchains are growing in usage.
As usage grows, however, volatility has become a problem. The
markets for cryptographic coinage have become highly speculative
and extreme price variations are hindering mainstream adoption.
BRIEF DESCRIPTION OF THE SEVERAL VIEWS OF THE DRAWINGS
[0003] The features, aspects, and advantages of the exemplary
embodiments are understood when the following Detailed Description
is read with reference to the accompanying drawings, wherein:
[0004] FIGS. 1-7 are simplified illustrations of stability
mechanisms for cryptographic coinage in a blockchain
environment;
[0005] FIGS. 7-10 are more detailed illustrations of an operating
environment, according to exemplary embodiments;
[0006] FIGS. 11-13 illustrate a below-target scenario, according to
exemplary embodiments;
[0007] FIGS. 14-15 illustrate an above-target scenario, according
to exemplary embodiments;
[0008] FIG. 16 illustrates indexing of cryptographic coinage,
according to exemplary embodiments;
[0009] FIGS. 17-18 illustrate blockchain recordations, according to
exemplary embodiments;
[0010] FIGS. 19-20 illustrate a blockchain data layer, according to
exemplary embodiments;
[0011] FIGS. 21-25 further illustrate the blockchain data layer,
according to exemplary embodiments
[0012] FIG. 26 illustrates fraud detection, according to exemplary
embodiments;
[0013] FIG. 27 illustrates monetary policy based on the blockchain
data layer, according to exemplary embodiments;
[0014] FIG. 28 is a flowchart illustrating a method or algorithm
for stable pricing of cryptographic coinage, according to exemplary
embodiments; and
[0015] FIGS. 29-30 depict still more operating environments for
additional aspects of the exemplary embodiments.
DETAILED DESCRIPTION
[0016] The exemplary embodiments will now be described more fully
hereinafter with reference to the accompanying drawings. The
exemplary embodiments may, however, be embodied in many different
forms and should not be construed as limited to the embodiments set
forth herein. These embodiments are provided so that this
disclosure will be thorough and complete and will fully convey the
exemplary embodiments to those of ordinary skill in the art.
Moreover, all statements herein reciting embodiments, as well as
specific examples thereof, are intended to encompass both
structural and functional equivalents thereof. Additionally, it is
intended that such equivalents include both currently known
equivalents as well as equivalents developed in the future (i.e.,
any elements developed that perform the same function, regardless
of structure).
[0017] Thus, for example, it will be appreciated by those of
ordinary skill in the art that the diagrams, schematics,
illustrations, and the like represent conceptual views or processes
illustrating the exemplary embodiments. The functions of the
various elements shown in the figures may be provided through the
use of dedicated hardware as well as hardware capable of executing
associated software. Those of ordinary skill in the art further
understand that the exemplary hardware, software, processes,
methods, and/or operating systems described herein are for
illustrative purposes and, thus, are not intended to be limited to
any particular named manufacturer.
[0018] As used herein, the singular forms "a," "an," and "the" are
intended to include the plural forms as well, unless expressly
stated otherwise. It will be further understood that the terms
"includes," "comprises," "including," 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. It will be understood that when an element is
referred to as being "connected" or "coupled" to another element,
it can be directly connected or coupled to the other element or
intervening elements may be present. Furthermore, "connected" or
"coupled" as used herein may include wirelessly connected or
coupled. As used herein, the term "and/or" includes any and all
combinations of one or more of the associated listed items.
[0019] It will also be understood that, although the terms first,
second, etc. may be used herein to describe various elements, these
elements should not be limited by these terms. These terms are only
used to distinguish one element from another. For example, a first
device could be termed a second device, and, similarly, a second
device could be termed a first device without departing from the
teachings of the disclosure.
[0020] FIGS. 1-7 are simplified illustrations of stability
mechanisms for cryptographic coinage 20 in a blockchain environment
22, according to exemplary embodiments. Here exemplary embodiments
may create, and/or destroy, the cryptographic coinage 20 to
maintain a stable price or value as to a target value 24. For
example, an issuing authority 26 creates or issues pegged
cryptographic tokens (or "PT") 28 and variable-priced cryptographic
tokens (or "VT") 30. Each pegged cryptographic token 28 and each
variable-priced cryptographic token 30 is preferably freely and
independently traded in a market exchange 32, but the market
exchange 32 is not necessary. Regardless, a cryptographic exchange
rate 34 defines or establishes relative values between the pegged
cryptographic token 28 and the variable-priced cryptographic token
30. That is, the cryptographic exchange rate 34 allows the value of
the pegged cryptographic token 28 to be determined, converted,
and/or exchanged into the variable-priced cryptographic token 30
and vice versa.
[0021] The issuing authority 26 may perform synthetic pairing.
Because the values of the pegged cryptographic token 28 and the
variable-priced cryptographic token 30 are related (perhaps via the
cryptographic exchange rate 34), the pegged cryptographic token 28
and the variable-priced cryptographic token 30 may be termed a
synthetic pair 36 and their supply may be managed using a creation
operation 38 and/or a destruction operation 40. For example, any
user or holder of the variable-priced cryptographic token(s) 30 may
request that the issuing authority 26 covert a certain number of
her variable-priced cryptographic tokens 30 to the pegged
cryptographic token(s) 28, perhaps on demand, at the current
cryptographic exchange rate 34. Here, though, exemplary embodiments
may perform the destruction operation 40 to destroy the user's
requested number of her variable-priced cryptographic token(s) 30
and also perform the creation operation 38 to create an equivalent
number of the pegged cryptographic tokens 28, as determined by the
current cryptographic exchange rate 34. In plain words, exemplary
embodiments destroy the user's requested number of her
variable-priced cryptographic tokens 30 and create the equivalent
number of the pegged cryptographic tokens 28.
[0022] FIG. 2 illustrates additional synthetic pairing. Here the
user or holder may request that the issuing authority 26 covert a
certain number of her pegged cryptographic tokens 28 to the
equivalent number of the variable-priced cryptographic tokens 30,
perhaps on demand, again at the current cryptographic exchange rate
34. The issuing authority 26 may thus perform the destruction
operation 40 to destroy the user's requested number of her pegged
cryptographic tokens 28 and also perform the creation operation 38
to create the equivalent number of the variable-priced
cryptographic tokens, as determined by the current cryptographic
exchange rate 34.
[0023] Exemplary embodiments thus eliminate reserves. Conventional
stablecoin mechanisms are backed by fiat reserves or traditional
assets. Exemplary embodiments, in contradistinction, eliminate any
reserve requirement by leveraging the ability to create, issue, and
destroy the pegged cryptographic tokens 28 and the variable-priced
cryptographic tokens 30, according to the cryptographic exchange
rate 34 as determined by the free market exchange 32. Simply put,
the issuing authority 26 financially or reputationally backs the
pegged cryptographic tokens 28 using the variable-priced
cryptographic tokens as an indirect reserve 42.
[0024] Exemplary embodiments thus present a simple and elegant
solution for stable values of the cryptographic coinage 20. The
indirect reserve 42 has the advantage of seigniorage shares,
without the complexity. That is, exemplary embodiments elastically
manage the supply of the pegged cryptographic tokens 28 and the
variable-priced cryptographic tokens 30 in a decentralized fashion,
without large and cumbersome collateral requirements and complex
algorithmic regulations. Seigniorage shares act like a central bank
to issue stable tokens, but seigniorage shares assumes that the
basis of the issuance is a token outside the control of a smart
contract. Here, the indirect reserve 42 assumes the issuing
authority 26 has control of both the pegged cryptographic token 28
and the variable-priced cryptographic token 30. By playing off the
volatility of the variable-priced cryptographic token 30 against
the pegged cryptographic token 28, the indirect reserve 42 is able
to leverage game theory and arbitrage to get the free market
exchange 32 to force the pegged cryptographic token 28 to match its
target value 24.
[0025] Exemplary embodiments satisfy the goals for a stablecoin
mechanism. The pegged cryptographic token 28 should be secure
against crashes, decentralized, and collaterally efficient. The
indirect reserve 42 is always able to meet its obligations, because
the issuing authority 26, by definition, has the management power
and authority to create and to destroy the supply of the
variable-priced cryptographic tokens 30 and the pegged
cryptographic tokens 28. There are no reserves to run out, and the
issuing authority 26 may also match any obligation. The mechanisms
for conversion between the variable-priced cryptographic tokens 30
and the pegged cryptographic tokens 28 are completely distributed
and autonomous, thus satisfying the goal of decentralization.
Moreover, the pegged cryptographic tokens 28 are created as
collateral in the variable-priced cryptographic tokens 30 and
destroyed in one direction, while the variable-priced cryptographic
tokens 30 are created as collateral in the pegged cryptographic
tokens 28 and destroyed in the other direction, so no collateral is
actually held or required by the issuing authority 26. Simply put,
the issuing authority 26 never runs out of, or exhausts, or
overleverages, its collateral, so the issuing authority 26 may
always respond to and execute buy/sell/trade orders from clients.
Exemplary embodiments eliminate any need for auctioned bonds.
[0026] FIG. 3 illustrates a below-target scenario. Here a current
market value 44 of the pegged cryptographic token 28 lags, or
trails, the desired target value 24. Put another way, if the pegged
cryptographic token 28 is trading low, then a demand 46 for the
pegged cryptographic token 28 is low and devalued relative to the
variable-priced cryptographic token 30. Traders see a buy
opportunity in the pegged cryptographic token 28, while holders of
the variable-priced cryptographic token 30 see a sell opportunity
to reap a profit. The holders of the variable-priced cryptographic
tokens 30 will sell or exchange a quantity of their variable-priced
cryptographic tokens 30 for an equivalent number of the pegged
cryptographic tokens 28 (according to the cryptographic exchange
rate 34), thus realizing the profit. The issuing authority 26,
acting in concert with the free market exchange 32, jointly operate
as a powerful stabilizing force for the pegged cryptographic token
28. Exemplary embodiments may thus enforce independent trading
platforms like exchanges through arbitrage to create a Schelling
point at the target value 24 of the pegged cryptographic token
28.
[0027] Stabilization may occur. Because a profit opportunity
exists, holders sell or exchange their variable-priced
cryptographic tokens 30 for an equivalent number of the pegged
cryptographic tokens 28 (according to the cryptographic exchange
rate 34), thus realizing the profit. As the sales/exchanges are
processed, the population pool or quantity of the variable-priced
cryptographic tokens 30 in the market exchange 32 is reduced
(perhaps due to the destruction operation 40) and the population
quantity or pool of the pegged cryptographic tokens 28 (e.g., a
total number in usage or issuance) increases in the market exchange
32 (perhaps due to the creation operation 38). As the cryptocoinage
exchange proceeds, the issuing authority 26 and/or the market
exchange 32 may monitor the population supplies of the
variable-priced cryptographic tokens 30, the pegged cryptographic
tokens 28, their current market values 44, and their target values
24. If too many variable-priced cryptographic tokens 30 are sold or
exchanged and destroyed, there may be a greater number of the
pegged cryptographic tokens 28 than desired (due to the creation
operation 38 and/or the destruction operation 40) and an oversupply
condition may exist. Simultaneously, or nearly simultaneously, the
issuing authority 26 and/or the market exchange 32 may cooperate to
reduce, or withdraw, the pegged cryptographic tokens 28 from the
market exchange 32. The issuing authority 26, in other words,
performs the destruction operation 40 to withdraw and destroy a
desired quantity of the pegged cryptographic tokens 28 from the
market exchange 32 to stabilize its current market value 44 to the
target value 24. At nearly the same time, the issuing authority 26
may also perform the creation operation 38 to create a desired
quantity of the variable-priced cryptographic tokens 30 and
injects, or deposits, the newly-created variable-priced
cryptographic tokens 30 into the market exchange 32, thus
replenishing its population supply. These trades/exchanges may
happen without delays imposed by deposits and withdraws as long as
balances are setup ahead of time by the trader. Trades on the
market exchange 32 and with the issuing authority 26 may be
executed in parallel. Once the trades are executed and recorded
(perhaps to blockchains 48a and/or 48b, as later paragraphs will
explain), the issuing authority 26 deposits or replenishes the
population supply or balance of the variable-priced cryptographic
tokens 30 into the market exchange 32 to set the market exchange 32
up for the next arbitrage opportunity.
[0028] Exemplary embodiments thus stabilize the pegged
cryptographic token 28. Because the exchange of the pegged
cryptographic token 28 for the variable-priced cryptographic token
30 could vary greatly over time, the issuing authority 26 ensures
enough variable-priced cryptographic tokens 30 are
injected/provided for any transaction. These variable-priced
cryptographic tokens 30 are created and the pegged cryptographic
tokens 28 are destroyed. Moreover, the issuing authority 26 may
also create any amount of the variable-priced cryptographic tokens
30 that are needed to maintain an equilibrium between the current
market value 44 and the target value 24 of the pegged cryptographic
token 28.
[0029] Exemplary embodiments use market forces. If the pegged
cryptographic token 28 is trading low, then traders/holders in the
market exchange 32 consider the pegged cryptographic token 28 to be
devalued relative to the variable-priced cryptographic token 30.
The market exchange 32 may have a pool of the pegged cryptographic
tokens 28 and another pool of the variable-priced cryptographic
tokens 30. The issuing authority 26 (e.g., a protocol or central
authority off the market exchange 32) also has additional pools of
the pegged cryptographic tokens 28 and the variable-priced
cryptographic tokens 30. When the pegged cryptographic token 28 is
devalued by the market exchange 32, demand is low and
traders/holders will have a profit incentive to buy the pegged
cryptographic token 28 at its low current market price or value 44,
thus converting the pegged cryptographic token 28 to its equivalent
number of variable-priced cryptographic tokens 30 (according to the
cryptographic exchange rate 34). Because the issuing authority 26
may monitor the total number of the variable-priced cryptographic
tokens 30, the issuing authority 26 may also, nearly
simultaneously, buy an excess number of the variable-priced
cryptographic tokens 30 to maintain a consistent supply or pool of
the variable-priced cryptographic tokens 30. Recall that a buy
order destroys the variable-priced cryptographic tokens 30 and
creates or gains more pegged cryptographic tokens 28. Simply put,
anytime a trader/holder and/or the issuing authority 26 can make
money, market forces will push the current market price or value 44
up. An increasing market value 44 concomitantly increases the
demand of the pegged cryptographic token 28, thus bringing the
current market value 44 toward the target value 24.
[0030] FIG. 4 illustrates an above-target scenario. Here the
current, market value 44 of the pegged cryptographic token 28 is
greater or higher than its desired target value 24. The demand 46
for the pegged cryptographic token 28 is increasing, so the pegged
cryptographic token 28 may eventually be overvalued relative to the
variable-priced cryptographic token 30 and/or to its target price
or value 24. Holders of the pegged cryptographic token 28 have the
sell opportunity to reap a profit, while traders see the buy
opportunity in the variable-priced cryptographic token 30. The
holders sell or exchange their pegged cryptographic tokens 28 for
an equivalent number of the variable-priced cryptographic tokens 30
(according to the cryptographic exchange rate 34), thus realizing
the profit. As the sales/exchanges are processed, demand for the
pegged cryptographic token 28 decreases, thus reducing its current
market value 44 toward its target value 24. Moreover, the demand 46
for the variable-priced cryptographic token 30 increases, thus
increasing its current market value 44.
[0031] Population control may also be implemented. As the holders
of the pegged cryptographic token 28 sell, the population pool or
quantity of the pegged cryptographic tokens 28 in the market
exchange 32 decreases. As the coinage trades proceed, the issuing
authority 26 and/or the market exchange 32 may monitor the
population supplies of the variable-priced cryptographic tokens 30,
the pegged cryptographic tokens 28, their current market values 24,
and their target values 24. If too many pegged cryptographic tokens
28 are sold or exchanged and destroyed, there may be a greater
number of the variable-priced cryptographic tokens 30 than desired
(due to the creation operation 38 and/or the destruction operation
40) and the oversupply condition may exist. Simultaneously, or
nearly simultaneously, the issuing authority 26 and/or the market
exchange 32 may cooperate to reduce, or withdraw, the
variable-priced cryptographic tokens 30 from the market exchange
32. The issuing authority 26, in other words, performs the
destruction operation 40 to destroy a desired quantity of the
variable-priced cryptographic tokens 30 from the market exchange 32
to stabilize its current market value 44 to the target value 24. At
nearly the same time, the issuing authority 26 performs the
creation operation 38 to create a desired quantity of the pegged
cryptographic tokens 28 and injects, or deposits, the newly-created
pegged cryptographic tokens 28 into the market exchange 32, thus
replenishing its population supply. These trades may then be
recorded to the blockchain 48 (as later paragraphs will
explain).
[0032] Market forces again prevail. If the value of the pegged
cryptographic token 28 is high compared to its target value 24
and/or the variable-priced cryptographic token 30, then the pegged
cryptographic token 28 may be sold on the market exchange 32 for
the variable-priced cryptographic token 30. This sell operation
results in a greater amount of the variable-priced cryptographic
tokens 30 than the pegged cryptographic token 28 should allow. At
the same time, a lesser amount of the variable-priced cryptographic
tokens 30 can be exchanged for the same pegged cryptographic tokens
28 by the issuing authority 26, thus replenishing the supply of the
pegged cryptographic tokens 28 in the market exchange 32.
[0033] The issuing authority 26 may thus be a market participant.
However, the issuing authority 26 may participate for opposite
market effects. When the issuing authority 26 trades between the
pegged cryptographic tokens 28 and the variable-priced
cryptographic tokens 30, the market effect of these trades is
opposite to the trades on the market exchange 32. Suppose, for
example, that a large number of the variable-priced cryptographic
tokens 30 were sold for between the pegged cryptographic tokens 28
on the market exchange 32. The price of the variable-priced
cryptographic token 30 necessarily goes down as the trade(s)
consumes the order book for the variable-priced cryptographic token
30. On the other hand, a large number of the variable-priced
cryptographic tokens 30 exchanged for the pegged cryptographic
tokens 28 using the issuing authority 26 reduces the supply of the
variable-priced cryptographic tokens 30 by that amount. Lowering
the supply of the variable-priced cryptographic tokens 30
eventually increases the current market price 44 of the
variable-priced cryptographic tokens 30. So, as the pegged
cryptographic token 28 becomes popular as a stable value, the
demand 46 for the pegged cryptographic token 28 is likely to rise,
but the only way to create a bigger supply of the pegged
cryptographic token 28 is through the conversation of the
variable-priced cryptographic token 30 to the pegged cryptographic
token 28, which lowers the supply of the variable-priced
cryptographic token 30. On the other hand, if the value of the
variable-priced cryptographic token 30 is in question and falls in
the market exchange 32, conversion to the pegged cryptographic
token 28 becomes attractive. All of these operations (e.g., the
creation operation 38 and the destruction operation 40) increase
the value of the variable-priced cryptographic token 30. As the
value of the variable-priced cryptographic token 30 goes up, market
participants will purchase the variable-priced cryptographic token
30 and thus further increase its value. But the demand 46 may also
trigger the conversion of the pegged cryptographic token 28 to the
variable-priced cryptographic token 30, and that conversion may
dampen the growth in value of the variable-priced cryptographic
token 30 by increasing the supply.
[0034] Market arbitrage may be autonomous. The blockchain 48a may
include so-called smart or digital contracts 50 that self-execute
buy/sell trades according to predefined contractual parameters. The
blockchain 48 may thus monitor the current market values 44 and/or
the target values 24 for the variable-priced cryptographic token 30
and the pegged cryptographic token 28 and execute pre-defined buy
and sell orders. Digital contracts 50 may thus be automated traders
that buy and sell the cryptographic tokens 28 and 30. An entity or
party may thus acquire more of the cryptographic tokens 28 and 30
than desired, while at the same time selling/destroying the
cryptographic tokens 28 and 30 for a profit. The entity or party
may thus configure their smart or digital contracts 50 to achieve
financial goals, yet exemplary embodiments ensure that the current
market value 44 and the target value 24 are stable and less likely
to vary.
[0035] Exemplary embodiments are bondless. Neither the buyer,
seller, nor the issuing authority 26 is required to post or provide
a financial or coin bond, security, or other asset. Simply put, any
party or entity, whether company, corporation, or individual
person, may participate in the market exchange 32 and buy or sell
the variable-priced cryptographic token 30 and the pegged
cryptographic token 28. Indeed, exemplary embodiments may be
applied to the market exchange 32 having a small number of only two
(2) players or hundreds, thousands, or millions of
participants.
[0036] FIG. 5 further illustrates the pegged cryptographic token
28. As this disclosure above explained, the pegged cryptographic
token 28 and the variable-priced cryptographic token 30 may have
related values. The pegged cryptographic token 28, in other words,
may be an encryption-secured digital medium of exchange whose value
(e.g., the target value 24) is tied to some other asset or medium
of exchange. The pegged cryptographic token 28, in particular, may
be linked to any nation's currency 52 (such as the United States
Dollar). The pegged cryptographic token 28, however, may be based
on other assets, such as gold and other precious metals or even one
or more other cryptographic coins. FIG. 5, for example, illustrates
a reference cryptographic token (or "RT") 54 which may also be
freely traded on the market exchange 32. The market exchange 32 may
thus establish or set the values of the variable-priced
cryptographic token 30 and the pegged cryptographic token 28 in
relative terms to the reference cryptographic token 54. The
cryptographic exchange rate 34, in other words, may be defined
based on the relative values between the pegged cryptographic token
28, the variable-priced cryptographic token 30, and the reference
cryptographic token 54. The reference cryptographic token 54 may
thus only be used as a reference point. The pegged cryptographic
token 28 may be valued in relation to the Consumer Price Index
("CPI") adjusted to the United States Dollar. The issuing authority
26 may thus manage the cryptographic exchange rate 34 between the
pegged cryptographic token 28 and the variable-priced cryptographic
token 30, and the cryptographic exchange rate 34 drives the
arbitrage that stabilizes the pegged cryptographic token 28.
[0037] As FIG. 6 further illustrates, an oracle 60 may publish the
current market values 44. As the market exchange 32 operates, the
current market values 44 of the pegged cryptographic token 28, the
variable-priced cryptographic token 30, and/or the reference
cryptographic token 54 need to be discovered and dispersed to the
market participants. Blockchain miners and other federated servers
may find it inefficient to continuously and/or repeatedly query the
market exchange 32 for current pricing. Moreover, these pricing
queries would contribute to packet congestion in a communications
network serving or accessing the market exchange 32. Pricing
stability may require a faster and simpler mechanism for pricing
discovery. Exemplary embodiments, then, may utilize any query
mechanism to discover the current market values 44 of the
cryptographic tokens 28, 30, and/or 54. One or more oracle servers
62, for example, may communicate with the market exchange 32 and
with the issuing authority 26. The oracle servers 62 perform an
oracle function that provides historical and/or the current market
values 44 of the cryptographic tokens 28, 30, and/or 54. Any
participant of the market exchange 32, and the issuing authority
26, may send a query to the oracle server 62 and retrieve current
market values 44, the cryptographic exchange rate 34, and/or the
target values 24. Indeed, there may be multiple or different
cryptographic exchange rates 34, perhaps reflecting value spreads
when converting "VT" 30 to "PT" 28 or when converting "PT" 28 to
"VT" 30. The market exchange 32 thus establishes market values for
the cryptographic tokens 28, 30, and/or 54. The blockchain 48 may
additionally or alternative publish pricing information as a
transaction in a block 64 of data, which allows the smart, digital
contract 48 to remotely attest that the pricing information is
accurate.
[0038] Exemplary embodiments may also permit multiple coinage
trades. That is, participants in the market exchange 32 may buy and
sell many different cryptocurrencies and assets. For example, the
synthetic pair 36 may actually be associated multiple pegged
cryptographic tokens 28 and/or multiple variable-priced
cryptographic tokens 30. The synthetic pair 36 may thus be bought
and sold as a single trade or transaction involving the tokens 28
and 30, and that single transaction may be recorded to the
blockchain 48. Indeed, a single variable-priced cryptographic token
30 may be paired with several or many pegged cryptographic tokens
28, and the pegged cryptographic tokens 28 may be associated with
different issuing authorities 26 (such as BITCOIN.RTM.,
ETHEREUM.RTM., RIPPLE.RTM., or other cryptographic coin
mechanisms).
[0039] Pegging to the Consumer Price Index allows for a virtual
distributed market. Coinage trades need not be between people, as
exemplary embodiments would push collateral from one pegged
cryptographic token 28 to another. Suppose, for example, that the
pegged cryptographic token 28 is tied or associated with the Dow
Jones Industrial Average ("DJIA") as a token pair against the
variable-priced cryptographic token 30, gold, a BITCOIN.RTM. token,
and the US Dollar. Then, if a holder wanted to be in US Dollars,
the holder need only push or convert value over into dollars. If
the holder wanted to be in the DJIA, the holder could push and
convert into shares or holdings in the DJIA. The positional changes
increase the value of the variable-priced cryptographic token 30
because, the only way in is burn the variable-priced cryptographic
token 30 out of existence. The holder pushes the supply down, thus
increasing the demand interest in the distributed market exchange
32. The holder has thus necessarily created the higher price of the
variable-priced cryptographic token 30 in order to get her assets
into the system. Merely buying on the market exchange 32 creates a
price that allows the holder to get into the variable-priced
cryptographic token 30. Furthermore, as the holder moves out of the
variable-priced cryptographic token 30 into other assets or tokens,
the holder necessarily burns the supply down. Thus, moving into the
pegged cryptographic token 28 reinforces the supply of the
underlying variable-priced cryptographic token 30.
[0040] Exemplary embodiments may also limit risk. Buying, selling,
and destroying the variable-priced cryptographic token 30 only
risks the collateral that is in the system. In other words, if the
variable-priced cryptographic token 30 is only priced at five
dollars ($5.00) at a start of trading, the holder has no risk from
the pegged cryptographic token 28, as no pegged cryptographic token
28 exists or has been created. However, as participants buy the
variable-priced cryptographic tokens 30, in order to get into the
pegged cryptographic token 28 system, the market exchange 32 will
push up the price of the variable-priced cryptographic token 30. If
a holder should liquidate, then obviously the supply of the
variable-priced cryptographic token 30 increases and the price
drops. So, as people don't want to have the variable-priced
cryptographic token 30, demand drops and the price lowers. However,
if market participants desire the variable-priced cryptographic
token 30, they raise the price.
[0041] Trust is important. If the pricing information provided by
the oracle server 62 and/or by the blockchain 48 is untrusted or
unreliable, the market exchange 32 may fail. Trust may thus depend
on any participant's ability to audit and prove the distributed
nature of the oracle servers 62, the historical and current market
values 44 they collect over time, and the application of the
pricing data to trades by the issuing authority 26.
[0042] Additional observations on stabilization are provided. If
the variable-priced cryptographic token 30 loses significant value,
traders may flee or liquidate and convert to the pegged
cryptographic token 28 (to escape the falling value of the
variable-priced cryptographic token 30). However, this conversion
may destroy a significant quantity of the variable-priced
cryptographic tokens 30, thus reducing its supply in the market
exchange 32. A reduction in supply, in turn, may cause significant
inflation in the current market value 44 of the variable-priced
cryptographic token 30. Again, then, the destruction operation 40
provide by exemplary embodiments helps stabilize current market
value 44.
[0043] Demand further influences stabilization. Suppose that the
utility of the pegged cryptographic token 28 is significant,
implying that many market participants demand ownership positions.
The market participants, in other words, may want to acquire the
variable-priced cryptographic token 30 as the only gateway to
create the pegged cryptographic token 28 (via the destruction
operation and the creation operation 38, as above explained).
Demand for the variable-priced cryptographic token 30, in other
words, increases, thus increasing its current market value 44.
However, if the current market value 44 significantly increases,
holders of the pegged cryptographic token 28 may be tempted to
convert their pegged cryptographic tokens 28 to the variable-priced
cryptographic tokens 30, particularly if the trade volume is not
high and a thin market depth provides an advantage. However, such a
trade on the issuing authority tends to lower the price (e.g., the
current market value 44) by increasing the supply of the
variable-priced cryptographic tokens 30.
[0044] Exemplary embodiments may thus impose limits. At any point
in time, the ability to inflate the current market value 44 of the
variable-priced cryptographic token 30 is limited by the value and
quantity of the pegged cryptographic token 28. Similarly, the
supply of the pegged cryptographic tokens 28 is limited by the
value of the variable-priced cryptographic token 30. The stability
of the pegged cryptographic token 28 may thus be dependent not just
on the accuracy of the oracle servers 62 used by the issuing
authority 26, but stability may also depend on the extent to which
the price on the market exchange 32 matches the value provided nu
the oracle(s). In truth, prices of tokens and assets will vary
across different exchanges, and arbitrage opportunities exist for
all trading as a result. The pegged cryptographic token 28 then can
be expected to be close to the value of the reference cryptographic
token 54, but unlikely to be perfectly pegged to the value of the
reference cryptographic token 54.
[0045] Exemplary embodiments may introduce time delay. Trades
conducted by, or ordered by, the issuing authority 26 may
necessarily be delayed in time, due to the time required for the
oracle server(s) 62 to provide their pricing information. This
delay, especially if random, thwarts traders who attempt to front
run or anticipate upcoming, future trades by the issuing authority
26. This uncertainty may be a feature, as predictability is
necessary to game automatic systems. So, when a buy/sell order is
placed, the buyer/seller may have to wait some period of time
before that order picks up the oracle price to suppress or thwart
front-running. The time delay, though, may be limited or maxed out,
as too long of a delay may dampen or hinder the ability of the
market exchange 32 to correct prices.
[0046] The pegged cryptographic token 28 need not traded on the
market exchange 32. Upon launch of the pegged cryptographic token
28, where the variable-priced cryptographic token 30 is traded on
the market exchange 32, other observations may be noted. Holders of
the variable-priced cryptographic token 30 can move the
variable-priced cryptographic token 30 to the pegged cryptographic
token 28 using the services of the issuing authority 26 to escape
currency risk when the variable-priced cryptographic token 30 is
falling in value. This removes the variable-priced cryptographic
token 30 from the market exchange 32, thus reducing its market
supply and supporting the current market value 44 of the
variable-priced cryptographic token 30. At the same time, the
pegged cryptographic token 28 holds its current market value 44
(perhaps relative to its target value 24 or to the reference
cryptographic token 54). Exemplary embodiments thus provide a safe
harbor for treasury management purposes.
[0047] For example, suppose a traditional cryptocurrency "A"
supports the pegged cryptographic token 28 pegged to the US Dollar.
When the cryptocurrency A is slipping in value, the cryptocurrency
A can be converted to the pegged cryptographic token 28 with a
simple electronic wallet transaction. It should be noted that
converting the cryptocurrency A to the pegged cryptographic token
28 lowers the supply of the cryptocurrency A, tending to support
the price of the cryptocurrency A. When the price of the
cryptocurrency A is rising, a party that moved to the pegged
cryptographic token 28 can move back into the cryptocurrency A.
This does cause inflation in the cryptocurrency A, so such moves
will tend to lower the price of the cryptocurrency A, leading to a
steadier value, and discouraging large movements from the pegged
cryptographic token 28 to the cryptocurrency A. If the
cryptocurrency A and the pegged cryptographic token 28 are part of
an investment portfolio, these conversions can be done without
involving the market exchange 32 or looking for buyers. If the
cryptocurrency A is used for funding operations or paying for goods
and services, the pegged cryptographic token 28 provides a logical
mechanism for these transactions, as it has a predictable price
over time.
[0048] Both the pegged cryptographic token 28 and the
variable-priced cryptographic token 30 may be traded on the market
exchange 32. For miners of operators of a public blockchain that
have expenses to pay, conversion to US Dollars may be desired.
However, they also have a vested interest in maintaining the price
of the variable-priced cryptographic token 30. A conversion of the
variable-priced cryptographic token 30 to the pegged cryptographic
token 28 supports the price of the variable-priced cryptographic
token 30 (their likely unit of support), and the pegged
cryptographic token 28 can be moved to an exchange and liquidated
for an expected value more easily. If the variable-priced
cryptographic token 30 is falling in value over time, the pegged
cryptographic token 28 becomes an increasingly attractive option,
and can be executed in a reasonably predictable transaction
compared to exchanges. At the same time, such conversions support
the price of the variable-priced cryptographic token 30. If the
variable-priced cryptographic token 30 is rising in price,
purchasing on the market exchange 32 will support the price, while
conversion of the pegged cryptographic token 28 to the
variable-priced cryptographic token 30 will tend to slow gains in
the variable-priced cryptographic token 30. For those interested in
investing in the variable-priced cryptographic token 30,
transactions in the market exchange 32 make more sense.
[0049] Exemplary embodiments may include treasury management. Any
entity (such as the market exchange 32 and/or the issuing authority
26) may allocate the dollar-denominated pegged cryptographic token
28, plan a period of usage, monitor market conditions, and adjust
an exposure to the variable-priced cryptographic token 30 versus
the stability of the pegged cryptographic token 28. Exemplary
embodiments may manage pricing, demand, and supply of the
variable-priced cryptographic token 30, even if no one is trading
the pegged cryptographic token 28, because the protocol (executed
by the issuing authority 26) respects it.
[0050] Exemplary embodiments may also thwart sell loops. Suppose a
holder owns or holds a large amount or quantity of the
variable-priced cryptographic tokens 30. The holder, of course, may
sell the variable-priced cryptographic tokens 30, thus converting
to some quantity of the pegged cryptographic token 28. This sell
operation lowers the current market price of the variable-priced
cryptographic tokens 30. Now the holder has a resulting quantity of
the pegged cryptographic tokens 28. The holder may then withdraw
the pegged cryptographic tokens 28 from the market exchange 32
(such as moving the pegged cryptographic tokens 28 to her
electronic wallet). Later in time, the holder could move the pegged
cryptographic tokens 28 from her electronic wallet and exchange
back into the variable-priced cryptographic tokens 30. This
conversion inflates the supply of the variable-priced cryptographic
tokens 30 in the market exchange 32. In theory, then, the holder
could repeat this sell scheme to attack the current market value 44
of the variable-priced cryptographic tokens 30 and/or the pegged
cryptographic token 28. However, a problem with this attack
includes the fact that the attacker needs quite a bit of funds, and
the cryptographic tokens 28 and/or 30 may lose value with each
cycle. Moreover, the market participants may police actions. When
the price of the variable-priced cryptographic token 30 falls,
other participants may also convert to the pegged cryptographic
token 28, thus lowering the supply. This collective market action
my even negate the attacker's sell loop attack.
[0051] Preservation of wealth prevails. The attacker is trying to
inflate the value of the variable-priced cryptographic token 30 or
the pegged cryptographic token 28, depending on position. The
holder tries to sell the variable-priced cryptographic token 30 on
the market exchange 32, thus forcing down its price and acquiring
the pegged cryptographic token 28. The attacker may then approach
the issuing authority 26 and sell the pegged cryptographic token 28
back into the variable-priced cryptographic token 30, which
inflates the supply. The attacker can then upload the higher volume
to the market exchange 32 repeat the sell cycle, as the market
participants see the supply inflate and that is a downward
pressure. However, this attack process also raises the supply of
variable-priced cryptographic token 30, which necessarily burns
down the supply of the pegged cryptographic tokens 28. Ultimately,
then, this sell cycle would exhaust the entire supply of the pegged
cryptographic tokens 28, and the sell cycle costs the attacker
money. The attacker will be successful to the extent that he/she
loses money. However, as the variable-priced cryptographic tokens
30 are sold to drive down the price, other market participants will
panic and move into the pegged cryptographic tokens 28. As the
price of the variable-priced cryptographic tokens 30 falls, other
market participants buy the pegged cryptographic tokens 28, thus
also burning down the supply of the variable-priced cryptographic
tokens 30. So, while the attacker is trying to inflate the supply,
other market participants can be working against the attacker to
burn the supply down. Simply put, the other market participants are
preserving their wealth.
[0052] Exemplary embodiments may also apply to nation-state
governments. Countries with hyperinflation and a central bank
struggle to create a platform by which businesses and their markets
can transact. The conditions and constraints involved vary widely
from country, but exemplary embodiments may be applied by national
governments to improve currency management. Any country with a
national currency needs to have its value stabilized, and a
possible secondary token can be used to carry out business in the
immediate term. So, assume that a transaction currency (e.g., a
"USDpeg" is a national currency pegged to the United States
Dollar), implemented with an indirect pegging to the United States
Dollar and managed and controlled by the central bank, is a desired
solution. First, the national currency would have to be available
on a free exchange to establish a real exchange rate with the
United States Dollar. Second, the Central bank would provide
services to convert the national currency at the market exchange
rate into the USDpeg currency. Third, the Central bank would
provide services to convert the USDpeg currency at the market
exchange rate into the national currency. Fourth, the only
mechanism to generate the USDpeg currency would be the conversion
of the national currency to the USDpeg currency. As businesses and
transactions move to the USDpeg, the supply of the national
currency would be reduced, and the value of the national currency
should be supported. The concern would be for the national currency
to become worthless on the market. Some amount of fiscal
responsibility around managing the supply of the national currency
may be required. However, stability in business and the market
could be attained quicker and in parallel with fiscal reforms
rather than putting off stability until reforms are in place.
[0053] Exemplary embodiments overcome a loss in confidence. As the
reader may understand, a loss in confidence in any stable token may
create a downward spiral, where market forces drive value to low or
even historic lows. With an indirect pegged token (such as the
variable-priced cryptographic token 30), though, the value of the
pegged cryptographic token 28 is lower than the variable-priced
cryptographic token 30 that supports it. Arbitrage allows users to
diminish the supply of the pegged cryptographic token 28 to attain
more variable-priced cryptographic tokens 30 from the issuing
authority 26 than the trade of the variable-priced cryptographic
token 30 for pegged cryptographic token 28 on the market exchange
32 allows. Arbitrage will allow the trader to gain in the
variable-priced cryptographic tokens 30 at the expense of lowering
the supply of the pegged cryptographic token 28. While selling the
pegged cryptographic token 28 on the market exchange 32 to get out
of the pegged cryptographic token 28 will be a solution for many,
exemplary embodiments provide an arbitrage opportunity for traders
to profit, but necessarily lowers the supply of the pegged
cryptographic token 28 in the process. When both the
variable-priced cryptographic token 30 and the pegged cryptographic
token 28 fall in value, and the variable-priced cryptographic token
30 falls faster than arbitrage can be leveraged for profit, traders
could shift to selling off both the variable-priced cryptographic
token 30 and the pegged cryptographic token 28 on the exchanges,
and both the variable-priced cryptographic token 30 and the pegged
cryptographic token 28 could go to zero. This could happen with any
issuing authority with irresponsible monetary policy for the
variable-priced cryptographic token 30.
[0054] Still more observations are provided. Any oracle (such as an
operator of the oracle server 62 or other service provider) may be
as simple as members of any community polling and reporting using
application programming interfaces (or "APIs") provided by the
market exchange 32. If the oracle requires time for pricing
information to settle and record, conversions between the
variable-priced cryptographic token 30 and the pegged cryptographic
token 28 may be delayed in order to use future exchange rates to
avoid front running by holders watching and gaming the market.
Transactions may be recorded (perhaps in the blockchain 48) at the
beginning of the delay, but the transactions may be later executed
using the current price at the end of the delay. On the blockchain
48, the cryptocurrency exchange rate(s) 34 (perhaps gathered from
the oracle server 62) may be logged over time to provide an audit
trail, perhaps including conversions details (e.g., time, GPS
location, quantity, the current market price 44, and buy/sell
parties) and even the time delay implemented or enforced by the
issuing authority 26. Because the issuing authority 26 can create
the variable-priced cryptographic token 30 as needed, the
conversion of the pegged cryptographic token 28 to the
variable-priced cryptographic token 30 is always possible. Because
the pegged cryptographic token 28 is desired by parties performing
transactions over time, for many use cases the variable-priced
cryptographic token 30 may need to first be converted to the pegged
cryptographic token 28. This destroys the variable-priced
cryptographic token 30, while relatively simultaneously supporting
the value of the variable-priced cryptographic token 30 by reducing
the quantity or supply of the variable-priced cryptographic token
30. Arbitrage for the pegged cryptographic token 28 and/or the
variable-priced cryptographic token 30 in the exchange market 32,
and coinage conversions between the pegged cryptographic token 28
and the variable-priced cryptographic token 30 by the issuing
authority 26, maintains the value of the pegged cryptographic token
28 (perhaps at any value pegged to the reference cryptographic
token 54).
[0055] Even more observations are provided. Exemplary embodiments
may be implemented by any central bank. Exemplary embodiments may
be implemented by a smart contract and/or a blockchain protocol
(such as the blockchain 48). The pegged cryptographic token 28, the
variable-priced cryptographic token 30, and/or the reference token
54 may be a real world currency, a cryptocurrency implemented by a
blockchain, a token issued on a blockchain, or any other asset or
commodity or security as long as the issuing authority has a
realistic ability to issue the pegged cryptographic token 28, the
variable-priced cryptographic token 30, and/or the reference token
54 without fail according to the creation operation 38 and the
destruction operation 40 (as earlier explained). In the
cryptocurrency market, the concept of a stable coin is a coin that
has a constant value relative to one of the real-world currencies
(such as the US Dollar, Euro, Yen, Yuan, etc.). If the reference
token 54 is the U.S. Dollar, then the reference token 54 becomes a
stable coin pegged to the U.S. Dollar.
[0056] Exemplary embodiments may include transactional sharding. If
implemented on a blockchain at the protocol level, transactions
involving the pegged cryptographic token 28 may be restricted to a
single input account address to allow transactional sharding. If
any cryptographic coinage transaction specifies a single or
multiple input account addresses and a single or multiple output
account addresses, then the cryptographic coinage transaction may
be transactionally sharded (e.g., each transactional shard handles
a particular set of addresses to validate a transaction input is
valid). Once the input account address has been decremented as
required as a result of the transaction, the output account
addresses may be updated by messaging between shards. This approach
requires the transaction processing mechanism of the blockchain to
track and validate all shards, but a party interested in validating
the balance of an address need only validate the updates of the
address in the shard responsible for that address. The transaction
would be referenced by all shards involved. Transactional sharding
is further explained by U.S. application Ser. No. 16/116,991 filed
Aug. 30, 2018 and entitled "Transactional Sharding of Blockchain
Transactions," which is incorporated herein by reference in its
entirety.
[0057] Yet more observations are provided. If the variable-priced
cryptographic token 30 supports multiple pegged cryptographic
tokens 28 (where, for example, one pegged cryptographic token 28 is
pegged to the U.S. Dollar, another is pegged to BTC, another to the
EUR, another to the price of Gold, etc.) then these synthetic pairs
can be traded against each other on exchanges. Trading of the
pegged cryptographic token 28 on any exchange (such as the market
exchange 32) may have two paths for exchange to its the reference
cryptographic token 54. A trading pair (such as the pegged
cryptographic token 28 and the reference cryptographic token 54)
would allow the reference cryptographic token 54 to be purchased
for the pegged cryptographic token 28. Absent a trading pair,
purchase of a liquid token (such as the BITCOIN.RTM.) could be used
to sell for the reference cryptographic token 54 like the U.S.
Dollar. The pegged cryptographic token 28 may be converted to the
variable-priced cryptographic token 30 by the issuing authority 26,
and the variable-priced cryptographic token 30 moved onto an
exchange and traded for the reference cryptographic token 54
directly, or through a liquid token like BITCOIN.RTM. for
conversion to the reference cryptographic token 54 like the U.S.
Dollar. A blockchain implementation at the protocol level has many
advantages for defining and trading the pegged cryptographic token
28 because of the ability of users to audit supplies of
variable-priced cryptographic token 30 and pegged cryptographic
token 28, audit historical Oracle data used and Pegging Token
Operations.
[0058] Exemplary embodiments thus describe decentralized,
two-cryptocoinage mechanism for stability in value. Exemplary
embodiments may be protocol enforced according to an algorithm,
with little or no human intervention or judgment. Exemplary
embodiments thus implement a monetary policy by a decentralized
bank for stable cryptocurrency coinage.
[0059] FIGS. 7-10 are more detailed illustrations of an operating
environment, according to exemplary embodiments. FIG. 7 illustrates
the oracle server 62 communicating via a communications network 70
with a protocol server 72 and with a market server 74 in the
blockchain environment 22. The oracle server 62 has a processor 76
(e.g., ".mu.P"), application specific integrated circuit (ASIC), or
other component that executes a pricing application 78 stored in a
local, solid-state memory device 80. The oracle server 62 has a
network interface (not shown for simplicity) to the communications
network 70, thus allowing two-way, bidirectional communication. The
pricing application 78 includes instructions, code, and/or programs
that cause the oracle server 62 to perform operations, such as
sending pricing information 82 to the protocol server 72 and/or to
the market server 74. The pricing information 82 may include the
current market values 44 and the target values 24 of the pegged
cryptographic token 28 and the variable-priced cryptographic token
30. The pricing information 82 may include the cryptographic
exchange rate 34 between the pegged cryptographic token 28 and the
variable-priced cryptographic token 30. The oracle server 62 may
feed the pricing information 82 on a periodic or random timing
basis. However, the protocol server 72 and/or the market server 74
may send queries via the communications network 70 to the network
or IP address associated with the oracle server 62, and the queries
specify a query parameter that requests the latest and/or
historical pricing information 82. The oracle server 62 may then
retrieve and send the pricing information 82 as a query
response.
[0060] FIG. 8 illustrates the protocol server 72 and the market
server 74. These servers 72 and 74 may cooperate to achieve
algorithmic monetary policy. The protocol server 72 may be operated
by, or on behalf of, the issuing authority 26. The protocol server
72 has a processor 84 (e.g., ".mu.P"), application specific
integrated circuit (ASIC), or other component that executes a
protocol-side stability application 86 stored in a local,
solid-state memory device 88. The protocol server 72 has a network
interface (not shown for simplicity) to the communications network
70, thus allowing two-way, bidirectional communication. The
protocol-side stability application 86 includes instructions, code,
and/or programs that cause the protocol server 72 to perform
operations, such as performing the creation operation 38 and/or the
destruction operation 40.
[0061] The market server 74 is also processor-controlled. The
market server 74 is operated by, or on behalf of, the market
exchange 32. The market server 74 has a processor 90 (e.g.,
".mu.P"), application specific integrated circuit (ASIC), or other
component that executes an exchange-side stability application 92
stored in a local, solid-state memory device 94. The market server
74 has a network interface (not shown for simplicity) to the
communications network 70, thus allowing two-way, bidirectional
communication. The exchange-side stability application 92 includes
instructions, code, and/or programs that cause the market server 74
to perform operations, such as performing the creation operation 38
and/or the destruction operation 40. The protocol-side stability
application 86 and the exchange-side stability application 92 may
thus cooperate to maintain stability between the current market
values 44 and the target values 24 of the pegged cryptographic
token 28 ("PT") and/or the variable-priced cryptographic token 30
("VT").
[0062] FIG. 9 illustrates additional details. The market server 74
receives an electronic order 100 that specifies a buy transaction
102 and/or a sell transaction 104. While the electronic order 100
may be sent from any entity, FIG. 9 illustrates a participant
server 106 operated on behalf of a market participant 108. That is,
the market participant 108 is a member of the market exchange 32,
and the participant server 106 is registered and/or authorized to
submit the electronic order 100 specifying a buy or sell of a
quantity or number of the pegged cryptographic token 28 and/or the
variable-priced cryptographic token 30. The market server 74
obtains, reads, or retrieves the pricing information 82 and
processes and/or executes the electronic order 100. That is, the
market server 74 processes and/or executes the creation operation
38 and/or the destruction operation 40 according to the
cryptographic exchange rate 34.
[0063] Cryptographic conversion may occur. For example, the
participant server 106 may request that the market exchange 32
and/or the issuing authority 26 covert a certain number of the
variable-priced cryptographic token(s) 30 to the pegged
cryptographic token(s) 28 at the current cryptographic exchange
rate 34. As another example, the participant server 106 may request
that the market exchange 32 and/or the issuing authority 26 convert
a requested number of the pegged cryptographic token(s) 28 into the
variable-priced cryptographic token(s) 30 at the current
cryptographic exchange rate 34. The market exchange 32 and/or the
issuing authority 26 may thus create or destroy the variable-priced
cryptographic token(s) 30 and/or the pegged cryptographic token(s)
28, according to the creation operation 38 and/or the destruction
operation 40.
[0064] FIG. 10 illustrates near real time supply management.
Whenever the market server 74 receives the electronic order 100
(specifying the buy transaction 102 and/or the sell transaction
104, as FIG. 9 illustrated), the market server 74 may notify the
protocol server 72. The market server 74, for example, may send an
order notification 110 to the network or Internet Protocol address
associated with the protocol server 72. The order notification 110
may include or specify the quantity or number of the pegged
cryptographic token 28 and/or the variable-priced cryptographic
token 30 to be bought or sold. The order notification 110 may
include or specify the pricing information 82 at which the pegged
cryptographic token 28 and/or the variable-priced cryptographic
token 30 is bought or sold. Additionally or alternatively, the
protocol server 72 may query the oracle server 62 for the pricing
information 82. Regardless, when the protocol server 72 receives or
is informed of the order notification 110, the protocol server 72
may deposit or withdraw one or more pegged cryptographic token 28
to/from the market exchange to stabilize its current market value
44 to its target value 24. Likewise, the protocol server 72 may
deposit or withdraw one or more variable-priced cryptographic
tokens 30 to/from the market exchange to stabilize its current
market value 44 to its target value 24.
[0065] Exemplary embodiments may be applied regardless of
networking environment. Exemplary embodiments may be easily adapted
to stationary or mobile devices having cellular, wireless local
area networking capability (such as WI-FI.RTM.), near field, and/or
BLUETOOTH.RTM. capability. Exemplary embodiments may be applied to
mobile devices utilizing any portion of the electromagnetic
spectrum and any signaling standard (such as the radio spectrum and
IEEE 802 family of standards, GSM/CDMA/TDMA or any cellular
standard, and/or the ISM band). Exemplary embodiments, however, may
be applied to any processor-controlled device operating in the
radio-frequency domain and/or the Internet Protocol (IP) domain.
Exemplary embodiments may be applied to any processor-controlled
device utilizing a distributed computing network, such as the
Internet (sometimes alternatively known as the "World Wide Web"),
an intranet, a local-area network (LAN), and/or a wide-area network
(WAN). Exemplary embodiments may be applied to any
processor-controlled device utilizing power line technologies, in
which signals are communicated via electrical wiring. Indeed,
exemplary embodiments may be applied regardless of physical
componentry, physical configuration, or communications
standard(s).
[0066] Exemplary embodiments may utilize any processing component,
configuration, or system. Any processor could be multiple
processors, which could include distributed processors or parallel
processors in a single machine or multiple machines. The processor
can be used in supporting a virtual processing environment. The
processor could include a state machine, application specific
integrated circuit (ASIC), programmable gate array (PGA) including
a Field PGA, or state machine. When any of the processors execute
instructions to perform "operations," this could include the
processor performing the operations directly and/or facilitating,
directing, or cooperating with another device or component to
perform the operations.
[0067] Exemplary embodiments may packetize. When any device or
server communicates via the communications network 70, the device
or server may collect, send, and retrieve information. The
information may be formatted or generated as packets of data
according to a packet protocol (such as the Internet Protocol). The
packets of data contain bits or bytes of data describing the
contents, or payload, of a message. A header of each packet of data
may contain routing information identifying an origination address
and/or a destination address.
[0068] FIGS. 11-13 illustrate a below-target scenario, according to
exemplary embodiments. Here the current market value 44 of the
pegged cryptographic token 28 lags or trails its desired target
value 24. Put another way, if the pegged cryptographic token 28 is
trading low, then the demand 46 for the pegged cryptographic token
28 is falling and low and devalued relative to the variable-priced
cryptographic token 30. The digital or smart contract 50a-c,
whether processed by the market server 74, the protocol server 72,
and/or the participant server 106, determines the buy opportunity
in the pegged cryptographic token 28. Conversely, any smart
contracts 50a-c executed on behalf of holders of the
variable-priced cryptographic token 30 see the sell opportunity to
reap a profit. The smart contracts 50 may thus organize or arrange
to sell or exchange a quantity of the variable-priced cryptographic
tokens 30 for an equivalent quantity of the pegged cryptographic
tokens 28 (according to the cryptographic exchange rate 34), thus
realizing the profit. The protocol server 72, perhaps acting in
concert with the market server 74, may jointly operate as a
powerful stabilizing force for the pegged cryptographic token
28.
[0069] Stabilization may occur. Because a profit opportunity
exists, the smart contract 50 (perhaps executed by the blockchain
48) sells or exchanges the variable-priced cryptographic tokens 30
for an equivalent quantity or number of the pegged cryptographic
tokens 28 (according to the cryptographic exchange rate 34), thus
realizing the profit. As the sales/exchanges are processed, a total
population, quantity, or pool of the variable-priced cryptographic
tokens 30 in the market exchange 32 is reduced (perhaps due to the
destruction operation 40) and the total population, quantity, or
pool of the pegged cryptographic tokens 28 (e.g., a total number in
usage or issuance) increases in the market exchange 32 (perhaps due
to the creation operation 38). As the coinage exchanges proceed,
the issuing authority 26 and/or the market exchange 32 may monitor
the circulation numbers or supplies of the variable-priced
cryptographic tokens 30, the pegged cryptographic tokens 28, their
current market values 44, and the target value 24. If too many
variable-priced cryptographic tokens 30 are sold or exchanged and
destroyed, there may be a greater number of the pegged
cryptographic tokens 28 than desired (due to the creation operation
38 and/or the destruction operation 40) and the oversupply
condition may exist, perhaps causing values to fall.
Simultaneously, or nearly simultaneously, the issuing authority 26
and/or the market exchange 32 may cooperate to reduce, or withdraw,
the pegged cryptographic tokens 28 from the market exchange 32. The
issuing authority 26, in other words, performs the destruction
operation 40 to withdraw and destroy a desired quantity of the
pegged cryptographic tokens 28 from the market exchange 32 to
stabilize its current market value 44 to the target value 24. At
nearly the same time, the issuing authority 26 performs the
creation operation 38 to create a desired quantity of the
variable-priced cryptographic tokens 30 and injects, or deposits,
the newly-created variable-priced cryptographic tokens 30 into the
market exchange 32, thus replenishing its population supply. These
trades/exchanges may happen without delays imposed by deposits and
withdraws as long as balances are setup ahead of time by the
trader. Trades on the market exchange 32 and with the issuing
authority 26 may be executed in parallel. Once the trades are
executed and recorded (perhaps to the blockchain 48), the issuing
authority 26 deposits or replenishes the population supply or
balance of the variable-priced cryptographic tokens 30 into the
market exchange 32 to set the market exchange 32 up for the next
arbitrage opportunity.
[0070] Exemplary embodiments thus stabilize the pegged
cryptographic token 28. Because the exchange of the pegged
cryptographic token 28 for the variable-priced cryptographic token
30 could vary greatly over time, the issuing authority 26 ensures
enough variable-priced cryptographic tokens 30 are
injected/provided for any transaction. These variable-priced
cryptographic tokens 30 are created and the pegged cryptographic
tokens 28 are destroyed. Moreover, the issuing authority 26 may
also create any amount of the variable-priced cryptographic tokens
30 that are needed to maintain an equilibrium between the current
market value 44 and the target value 24 of the pegged cryptographic
token 28.
[0071] Exemplary embodiments use market forces. If the pegged
cryptographic token 28 is trading low, then traders/holders in the
market exchange 32 consider the pegged cryptographic token 28 to be
devalued relative to the variable-priced cryptographic token 30.
The market exchange 32 may have a pool of the pegged cryptographic
tokens 28 and another pool of the variable-priced cryptographic
tokens 30. The issuing authority 26 (e.g., a protocol or central
authority off the market exchange 32) also has additional pools of
the pegged cryptographic tokens 28 and the variable-priced
cryptographic tokens 30. When the pegged cryptographic token 28 is
devalued by the market exchange 32, demand is low and
traders/holders will have a profit incentive to buy the pegged
cryptographic token 28 at its low current market price 44, thus
converting the pegged cryptographic token 28 to its equivalent
number of variable-priced cryptographic tokens 30 (according to the
cryptographic exchange rate 34). Because the issuing authority 26
may monitor the total number of the variable-priced cryptographic
tokens 30, the issuing authority 26 may also, nearly
simultaneously, buy an excess number of the variable-priced
cryptographic tokens 30 to maintain a consistent supply or pool of
the variable-priced cryptographic tokens 30. Recall that a buy
order destroys the variable-priced cryptographic tokens 30 and
creates or gains more pegged cryptographic tokens 28. Simply put,
anytime a trader/holder and/or the issuing authority 26 can make
money, market forces will push the market price 44 up. An
increasing market price 44 concomitantly increases the demand of
the pegged cryptographic token 28, thus bringing the current market
price 44 toward the target value 24.
[0072] As FIG. 12 illustrates, exemplary embodiments may implement
algorithmic decentralized monetary policy. Assume, again, that the
current market value 44 of the pegged cryptographic token 28 lags
or trails its desired target value 24. The protocol-side stability
application 86 instructs the protocol server 72 to compare the
current market value 44 to its desired target value 24. When the
current market value 44 (or "CMV") is less than the target value 24
(or "TV"), a value difference 120 is negative (e.g.,
[CMV-TV]<0). Because the demand 46 for the pegged cryptographic
token 28 is falling or reducing, there may be too many of the
pegged cryptographic tokens 28 in the market exchange 32 and the
oversupply condition may exist. The protocol-side stability
application 86 may thus instruct the protocol server 72 to
implement pre-programmed fiscal measures to stabilize the current
market value 44 of the pegged cryptographic token 28. For example,
the protocol-side stability application 86 may identify and execute
a logical rule 122 that forces a withdrawal of the pegged
cryptographic tokens 28 from the market exchange 32. The logical
rule 122 may thus be an algorithmic code or instruction that is
executed in response to the negative value difference 120 and/or
the oversupply condition. The protocol server 72 and the market
server 74 may thus cooperate to withdraw and destroy a desired
quantity of the pegged cryptographic tokens 28 from the market
exchange 32 to stimulate the demand 46 and to increase its current
market value 44 toward the target value 24.
[0073] As FIG. 13 illustrates, exemplary embodiments may query an
electronic database 124. The electronic database 124 is illustrated
as being locally stored and maintained by the protocol server 72,
but any of the database entries may be stored by the market server
74 and/or at any remote, accessible location via the communication
network 70 (illustrated by FIG. 7). Regardless, the electronic
database 124 relates, maps, or associates different values of the
value difference 120 to their corresponding destruction quantity
126. While the electronic database 124 may have any logical and
physical structure, a relational structure is thought perhaps
easiest to understand. FIG. 13 thus illustrates the electronic
database 124 as a table 128 that relates, maps, or associates each
value difference 120 to its corresponding destruction quantity 126.
So, once the value difference 120 is determined, exemplary
embodiments may query the electronic database 124 for the value
difference 120 and identify its corresponding destruction quantity
126. While FIG. 13 only illustrates a simple example of a few
entries, in practice the electronic database 124 may have many
entries that detail a rich depository of different rules 122 and
their finely defined destruction quantities 126. Once the
destruction quantity 126 is determined, exemplary embodiments
perform the destruction operation 40 to remove or delete the
destruction quantity 126 of the pegged cryptographic tokens 28 from
the market exchange 32.
[0074] The creation operation 38 may also be performed. Recall that
exemplary embodiments may also monitor the total population,
quantity, or pool of the variable-priced cryptographic tokens 30 in
the market exchange 32. Once the value difference 120 is determined
(as above explained), the same or a different rule 122 may also be
implemented to create and to inject additional variable-priced
cryptographic tokens 30 into the market exchange 32. That is, the
electronic database 124 may additionally or alternatively have
entries that associate the different value differences 120 to
different creation quantities 130. Exemplary embodiments may thus
query the electronic database 124 for the value difference 120 and
identify its corresponding creation quantity 130. Once the creation
quantity 130 is determined, exemplary embodiments perform the
creation operation 38 to deposit or inject newly-created
variable-priced cryptographic tokens 30 into the market exchange
32. Exemplary embodiments may implement these pre-programmed fiscal
measures to stabilize the current market value 44 of the pegged
cryptographic token 28.
[0075] FIGS. 14-15 illustrate an above-target scenario, according
to exemplary embodiments. Here the current market value 44 of the
pegged cryptographic token 28 is greater or higher than its desired
target value 24. Demand for the pegged cryptographic token 28 is
increasing, so the pegged cryptographic token 28 may eventually be
overvalued relative to the variable-priced cryptographic token 30
and/or to its target price or value 24. The smart contract 50 may
thus determine the sell opportunity to reap a profit, while other
smart contracts/traders/holders see the buy opportunity in the
variable-priced cryptographic token 30. The smart contract 50 may
sell or exchange the pegged cryptographic tokens 28 for an
equivalent number of the variable-priced cryptographic tokens 30
(according to the cryptographic exchange rate 34), thus realizing
the profit. As the sales/exchanges are processed, the demand 46 for
the pegged cryptographic token 28 decreases, thus reducing its
current market value 44 toward its target value 24. Moreover, the
demand 46 for the variable-priced cryptographic token 30 increases,
thus increasing its current market value 44.
[0076] Population control may also be implemented. As the holders
of the pegged cryptographic token 28 sell, the population pool or
quantity of the pegged cryptographic tokens 28 in the market
exchange 32 decreases. As the coinage trades proceed, the issuing
authority 26 and/or the market exchange 32 may monitor the
population supplies of the variable-priced cryptographic tokens 30,
the pegged cryptographic tokens 28, their current market values 44,
and the target value 24. If too many pegged cryptographic tokens 28
are sold or exchanged and destroyed, there may be a greater number
of the variable-priced cryptographic tokens 30 than desired (due to
the creation operation 38 and/or the destruction operation 40) and
the oversupply condition may exist. Simultaneously, or nearly
simultaneously, the issuing authority 26 and/or the market exchange
32 may cooperate to reduce, or withdraw, the variable-priced
cryptographic tokens 30 from the market exchange 32. The issuing
authority 26, in other words, performs the destruction operation 40
to destroy a desired quantity of the variable-priced cryptographic
tokens 30 from the market exchange 32 to stabilize its current
market value 44 to the target value 24. At nearly the same time,
the issuing authority 26 performs the creation operation 38 to
create a desired quantity of the pegged cryptographic tokens 28 and
injects, or deposits, the newly-created pegged cryptographic tokens
28 into the market exchange 32, thus replenishing its population
supply. These trades may then be recorded to the blockchain 48.
[0077] Market forces again prevail. If the value of the pegged
cryptographic token 28 is high compared to its target value 24
and/or the variable-priced cryptographic token 30, then the pegged
cryptographic token 28 may be sold on the market exchange 32 for
the variable-priced cryptographic token 30. This sell operation
results in a greater amount of the variable-priced cryptographic
tokens 30 than the pegged cryptographic token 28 should allow. At
the same time, a lesser amount of the variable-priced cryptographic
tokens 30 can be exchanged for the same pegged cryptographic tokens
28 by the issuing authority 26, thus replenishing the supply of the
pegged cryptographic tokens 28 in the market exchange 32.
[0078] As FIG. 15 illustrates, more algorithmic currency control
may be implemented. Because the current market value 44 of the
pegged cryptographic token 28 exceeds its desired target value 24,
the demand 46 for the pegged cryptographic token 28 is increasing
and may become overvalued. The protocol-side stability application
86 instructs the protocol server 72 to compare the current market
value 44 to its desired target value 24. The value difference 120
is positive (e.g., [CMV-TV]>0) and the oversupply condition may
exist. Exemplary embodiments may implement additional
pre-programmed fiscal measures, such as executing one of the
logical rules 122 to force a reduction or withdrawal of the
variable-priced cryptographic token(s) 30 from the market exchange
32. Once the value difference 120 is determined, exemplary
embodiments may query the electronic database 124 for the value
difference 120 and identify its corresponding destruction quantity
126 and/or its corresponding creation quantity 130. The protocol
server 72 and the market server 74 may thus cooperate to withdraw
and destroy the destruction quantity 126 of the variable-priced
cryptographic tokens 30. Additionally or alternative, exemplary
embodiments may perform the creation operation 38 and deposit the
creation quantity 130 of newly-created pegged cryptographic token
28 into the market exchange 32. Exemplary embodiments may implement
these pre-programmed fiscal measures to stabilize the current
market values 44 of the pegged cryptographic token 28 and/or the
variable-priced cryptographic token 30.
[0079] As FIGS. 11-15 illustrate, the issuing authority 26 may thus
be one of the market participants 106. However, the issuing
authority 26 may participate for opposite market effects. When the
issuing authority 26 trades between the pegged cryptographic tokens
28 and the variable-priced cryptographic tokens 30, the market
effect of these trades is opposite to the trades on the market
exchange 32. Suppose, for example, that a large number of the
variable-priced cryptographic tokens 30 were sold for between the
pegged cryptographic tokens 28 on the market exchange 32. The price
of the variable-priced cryptographic token 30 necessarily goes down
as the trade(s) consumes the order book for the variable-priced
cryptographic token 30. On the other hand, a large number of the
variable-priced cryptographic tokens 30 exchanged for the pegged
cryptographic tokens 28 using the issuing authority 26 reduces the
supply of the variable-priced cryptographic tokens 30 by that
amount. Lowering the supply of the variable-priced cryptographic
tokens 30 eventually increases the current market price 44 of the
variable-priced cryptographic tokens 30. So, as the pegged
cryptographic token 28 becomes popular as a stable value, the
demand for the pegged cryptographic token 28 is likely to rise, but
the only way to create a bigger supply of the pegged cryptographic
token 28 is through the conversation of the variable-priced
cryptographic token 30 to the pegged cryptographic token 28, which
lowers the supply of the variable-priced cryptographic token 30. On
the other hand, if the value of the variable-priced cryptographic
token 30 is in question and falls in the market exchange 32,
conversion to the pegged cryptographic token 28 becomes attractive.
All of these operations (e.g., the creation operation 38 and the
destruction operation 40) increase the value of the variable-priced
cryptographic token 30. As the value of the variable-priced
cryptographic token 30 goes up, market participants will purchase
the variable-priced cryptographic token 30 and thus further
increase its value. But demand may also trigger the conversion of
the pegged cryptographic token 28 to the variable-priced
cryptographic token 30, and that conversion may dampen the growth
in value of the variable-priced cryptographic token 30 by
increasing the supply.
[0080] FIG. 16 illustrates indexing of cryptographic coinage,
according to exemplary embodiments. When any cryptographic token 28
and 30 is created or destroyed (perhaps initially or via the
creation operation 38 and/or the destruction operation 40, as above
explained), here exemplary embodiments may then log the details. As
a simple example, suppose the protocol server 72 logs each creation
operation 38 and each destruction operation 40 in the electronic
database 124. The electronic database 124 may thus store and
maintain detailed transactional records for each pegged
cryptographic token 28 and/or for each variable-priced
cryptographic token 30. Suppose, for example, that each pegged
cryptographic token 28 and each variable-priced cryptographic token
30 is uniquely identified with a unique token identifier 140.
Moreover, the electronic database 124 has entries that relate,
associate, or map each token identifier 140, its creation details
142, its deposit details 144 of entry or injection into the market
exchange 32, and its ownership details 146 (such as buyer/seller
account addresses, holder information, and/or electronic wallet
details). Moreover, if the cryptographic token 28 or 30 was subject
to the destruction operation 40, then the electronic database 124
may logs its corresponding destruction details 148 documenting its
withdrawal from the market exchange 32. Although not shown, the
entries may further relate each cryptographic token 28 or 30 to its
corresponding pricing information 82 and the smart contract 50
and/or the market server 74 that ordered or requested the
buy/sell/conversion. Exemplary embodiments may thus generate a
central repository that indexes each cryptographic token 28 or 30
that is created and/or deposited into the market exchange 32. The
entries may further relate each cryptographic token 28 or 30 that
was destroyed after creation (according to the creation operation
38). The entries may thus fully document what tokens 28 or 30 were
created, how and when and why, and also their destruction, if
any.
[0081] The electronic database 124 may be queried for its entries.
Because the electronic database 124 may store detailed creation and
destruction records for each pegged cryptographic token 28 and each
variable-priced cryptographic token 30, any client may send a query
to the protocol server 72 to identify related entries. As an
example, a query parameter may specify the unique token identifier
140 and request its corresponding entries (such as its date/time of
creation and current ownership/holder details). A query response is
sent back to the client, and the query response specifies any of
the corresponding database entries.
[0082] FIGS. 17-18 illustrate blockchain recordations, according to
exemplary embodiments. Here, when any pegged cryptographic token 28
or any variable-priced cryptographic token 30 is created or
destroyed, exemplary embodiments may record that creation operation
38 and/or destruction operation 40 to the blockchain 48. The market
server 74, for example, may generate the block 64a of data within
the blockchain 48a. The exchange-side stability application 92 may
even call, invoke, and/or apply an electronic representation of a
hashing algorithm 150 to any of the entries in the electronic
database 124 and/or to the block 64 of data within the blockchain
48a. The hashing algorithm 150 thus generates one or more hash
values 152, which may be incorporated into the blockchain 48a. The
exchange-side stability application 92 may then instruct the market
server 74 to send the blockchain 48a to any destination, such as
the network address (e.g., Internet protocol address) associated
with the protocol server 72.
[0083] FIG. 18 also illustrates blockchain records. When any pegged
cryptographic token 28 or any variable-priced cryptographic token
30 is created or destroyed, that creation operation 38 and/or
destruction operation 40 may be recorded to the blockchain 48b. The
protocol server 72, for example, may generate the block 64b of data
within the blockchain 48b. The protocol-side stability application
86 may also call, invoke, and/or apply an electronic representation
of the hashing algorithm 150 to any of the entries in the
electronic database 124 and/or to the block 64b of data within the
blockchain 48b. The hashing algorithm 150 thus generates one or
more hash values 152, which are incorporated into the blockchain
48b.
[0084] FIGS. 19-20 illustrate a blockchain data layer 160,
according to exemplary embodiments. Here the protocol server 72 may
generate a blockchain data layer 160 that also documents the
creation operation 38 and the destruction operation 40 involving or
associated with any pegged cryptographic token 28 or any
variable-priced cryptographic token 30. Recall that the protocol
server 72 is operated by or on behalf of the issuing authority 26
that manages the population supply of the pegged cryptographic
tokens 28 and the variable-priced cryptographic tokens 30. When any
token 28 or 30 is created or destroyed, whether within the market
exchange 32 or by the issuing authority 26, the corresponding
creation operation 38 and the destruction operation 40 may be
documented within the blockchain data layer 160. The protocol
server 72 may thus be termed or called a data layer server 162 that
generates the blockchain data layer 160. The protocol-side
stability application 86 may thus call, invoke, or apply a data
layer application 164 as a software module or subroutine that
generates data records 166 in the blockchain data layer 160.
Moreover, the blockchain data layer 160 may also add another layer
of cryptographic hashing to generate a public blockchain 168. The
blockchain data layer 160 acts as a validation service that
validates the smart, digital contract 50 was executed according to
the creation operation 38 and the destruction operation 40.
Moreover, the blockchain data layer 160 may generate a
cryptographic proof 170. The public blockchain 168 thus publishes
the cryptographic proof 170 as a public ledger that establishes
chains of blocks of immutable evidence.
[0085] The blockchain data layer 160 may be searched. Because
blockchain data layer 160 may track and/or prove any creation
operation 38 and/or any destruction operation 40, exemplary
embodiments may search the blockchain data layer 160 for any query
parameter. For example, the protocol server 72 may receive queries
from clients requesting the data records 166 within the blockchain
data layer 160 that match a query parameter. As a simple example,
suppose a query specifies the token identifier 140 as a query
parameter. Recall that the token identifier 140 uniquely identifies
its corresponding pegged cryptographic token 28 or variable-priced
cryptographic token 30. The protocol server 72 may then act as a
query handler, determine a matching data record 166 or other entry
in the blockchain data layer 160, and identify/retrieve its
corresponding contents or data or entries. As another example,
suppose a query specifies some parameter or party associated with
the smart contract 50 (such as a contract identifier that uniquely
represents the smart contract 50). The protocol server 72 may then
identify/retrieve any data records 166 associated with the smart
contract 50, such as the specific pegged cryptographic token(s) 28
and the variable-priced cryptographic token(s) 30 that were
created/destroyed according to the smart contract 50.
[0086] FIG. 20 illustrates additional publication mechanisms. Once
the blockchain data layer 160 is generated, the blockchain data
layer 160 may be published in a decentralized manner to any
destination. The protocol server 72 (e.g., the data layer server
162), for example, may generate and distribute the public
blockchain 168 (via the communications network 70 illustrated in
FIGS. 7-8) to one or more federated servers 174. While there may be
many federated servers 174, for simplicity FIG. 20 only illustrates
two (2) federated servers 174a and 174b. The federated server 174a
and 174b provide a service and, in return, they are compensated
according to a compensation or services agreement or scheme.
[0087] Exemplary embodiments include still more publication
mechanisms. For example, the cryptographic proof 170 and/or the
public blockchain 168 may be sent (via the communications network
70 illustrated in FIGS. 7-8) to still another server 176. The
server 176 may then add another, third layer of cryptographic
hashing (perhaps using the hashing algorithm 150) and generate
another or second public blockchain 178. While the server 176
and/or the public blockchain 178 may be operated by, or generated
for, any entity, exemplary embodiments may integrate another
cryptographic coin mechanism. That is, the server 176 and/or the
public blockchain 178 may be associated with BITCOIN.RTM.,
ETHEREUM.RTM., RIPPLE.RTM., or other cryptographic coin mechanism.
The cryptographic proof 170 and/or the public blockchains 168 and
178 may be publicly distributed and/or documented as evidentiary
validation. The cryptographic proof 170 and/or the public
blockchains 168 and 178 may thus be historically and publicly
anchored for public inspection and review.
[0088] FIGS. 21-25 further illustrate the blockchain data layer
160, according to exemplary embodiments. The blockchain data layer
160 chains hashed directory blocks 180 of data into the public
blockchain 168. For example, the blockchain data layer 160 accepts
input data (such as any of the data logged in the electronic
database 124, and/or the blockchain 48a sent from the market server
74 illustrated in FIG. 17) within a window of time. While the
window of time may be configurable from fractions of seconds to
hours, exemplary embodiments use ten (10) minute intervals. FIG. 21
illustrates a simple example of only three (3) directory blocks
180a-c of data, but in practice there may be millions or billions
of different blocks. Each directory block 180 of data is linked to
the preceding blocks in front and the following or trailing blocks
behind. The links are created by hashing all the data within a
single directory block 180 and then publishing that hash value
within the next directory block.
[0089] As FIG. 22 illustrates, published data may be organized
within chains 182. Each chain 182 is created with an entry that
associates a corresponding chain identifier 184. As a simple
example, suppose there are several market participants 108 (such as
different participant servers 106, illustrated with reference to
FIG. 9), and each participant server 106 has its own corresponding
chain identifier 184a-d. The blockchain data layer 160 may thus
track any buy/sell/conversion and any other data associated with
each participant server 106 with its corresponding chain identifier
184a-d. As other examples, each pegged cryptographic token 28 and
each variable-priced cryptographic token 30 may also have its
corresponding token identifier 140 and its corresponding chain
identifier 184. A unique chain 182 may thus be used to track the
buy/sell/creation/destruction events for any token 28 and 30. New
and old data in time may be associated with, linked to, identified
by, and/or retrieved using the chain identifier 184a-d. Each chain
identifier 184a-d thus functionally resembles a directory 186a-d
(e.g., files and folders) for organized data entries.
[0090] FIG. 23 illustrates the data records 166 in the blockchain
data layer 160. As data is received as an input (such as the
blockchain 48 and/or the order notification 110 illustrated in
FIGS. 10-11), data is recorded within the blockchain data layer 160
as an entry 190. While the data may have any size, small chunks
(such as 10 KB) may be pieced together to create larger file sizes.
One or more of the entries 190 may be arranged into entry blocks
192 representing each chain 182 according to the corresponding
chain identifier 184. New entries for each chain 182 are added to
their respective entry block 192 (again perhaps according to the
corresponding chain identifier 184). After the entries 190 have
been made within the proper entry blocks 192, all the entry blocks
192 are then placed within in the directory block 180 generated
within or occurring within a window 194 of time. While the window
194 of time may be chosen within any range from seconds to hours,
exemplary embodiments may use ten (10) minute intervals. That is,
all the entry blocks 192 generated every ten minutes are placed
within in the directory block 180.
[0091] FIG. 24 illustrates cryptographic hashing. The protocol
server 72 executes the data layer application 164 to generate the
data records 166 in the blockchain data layer 160. The data layer
application 164 may then instruct the data layer server 162 to
execute the hashing algorithm 150 on the data records 166 (such as
the directory block 180 illustrated in FIGS. 21-23). The hashing
algorithm 150 thus generates one or more hash values 152 as a
result, and the hash values 152 represent the hashed data records
166. As one example, the blockchain data layer 160 may apply a
Merkle tree analysis to generate a Merkle root (representing a
Merkle proof 170) representing each directory block 180. The
blockchain data layer 160 may then publish the Merkle proof 170 (as
this disclosure explains).
[0092] FIG. 25 illustrates hierarchical hashing. The market server
74, generating the blockchain 48, provides a first layer 200 of
cryptographic hashing. The market server 74 may then send the
blockchain 48 to the protocol server 72. The protocol server 72,
executing the data layer application 164, generates the blockchain
data layer 160. The data layer application 164 may optionally
provide the second or intermediate layer 202 of cryptographic
hashing to generate the cryptographic proof 170. The data layer
application 164 may also publish any of the data records 166 as the
public blockchain 168, and the cryptographic proof 170 may or may
not also be published via the public blockchain 168. The public
blockchain 168 and/or the cryptographic proof 170 may be optionally
sent to a server 176 as an input to yet another public blockchain
178 (again, such as BITCOIN.RTM., ETHEREUM.RTM., or RIPPLE.RTM.)
for a third layer 204 of cryptographic hashing and public
publication. The first layer 200 and the second layer 202 thus ride
or sit atop a conventional public blockchain 178 (again, such as
BITCOIN.RTM., ETHEREUM.RTM., or RIPPLE.RTM.) and provide additional
public and/or private cryptographic proofs 170.
[0093] Exemplary embodiments may use any hashing function. Many
readers may be familiar with the SHA-256 hashing algorithm. The
SHA-256 hashing algorithm acts on any electronic data or
information to generate a 256-bit hash value as a cryptographic
key. The key is thus a unique digital signature. There are many
hashing algorithms, though, and exemplary embodiments may be
adapted to any hashing algorithm.
[0094] FIG. 26 illustrates fraud detection, according to exemplary
embodiments. Here destruction is confirmed to maintain the desired
quantity or number of the pegged cryptographic tokens 28 and/or the
variable-priced cryptographic tokens 30. For example, when the
market server 74 receives the electronic order 100 (specifying the
buy transaction 102 and/or the sell transaction 104, as illustrated
with reference to FIG. 9) associated with any pegged cryptographic
token 28, exemplary embodiments may first query the electronic
database 124 for the corresponding token identifier 140. If an
entry in the electronic database 124 associates the token
identifier 140 to the destruction operation 40, then exemplary
embodiments may escalate the electronic order 100 for a fraud
review. In plain words, if the token identifier 140 is associated
with a previous or historical destruction operation 40, then the
corresponding pegged cryptographic token 28 may have already been
destroyed in response to a previous or historical buy/sell order.
The pegged cryptographic token 28 may have already been tagged or
processed for deletion or removal from the market exchange 32, so
its market presence may indicate a potential fraudulent order.
Regardless, if fraud is suspected or inferred, exemplary
embodiments may delay or even halt processing of the electronic
order 100 for additional scrutiny.
[0095] The blockchain data layer 160 may also reveal fraudulent
efforts. Again, when any electronic order 100 specifies any
transaction involving any cryptographic token 28 or 30, exemplary
embodiments may additionally or alternatively query the data
records 166 in the blockchain data layer 160 for the corresponding
token identifier 140. If any data record 166 contains a matching
token identifier 140, the data record 166 may be retrieved and
read/inspected for the destruction operation 40. If the data record
166 logs the destruction operation 40, then exemplary embodiments
may infer that some party or market participant is attempting to
buy/sell/convert a dead, destroyed, or uncirculated token 28 or
30.
[0096] Fraud detection may also apply to the variable-priced
cryptographic tokens 30. When the electronic order 100 specifies a
buy/sell of any variable-priced cryptographic token 30, exemplary
embodiments may similarly query for its corresponding token
identifier 140 to identify any past or historical destruction
operation 40. Again, if the variable-priced cryptographic token 30
was previously slated for deletion or removal from the market
exchange 32, its continued market presence may indicate a potential
fraudulent order.
[0097] Exemplary embodiments may thus track circulation of the
tokens 28 and 30 within the market exchange 32. Any token
identifier 140 (or its hash value) may be compared to the entries
in the electronic database 124 and/or to the blockchain data layer
160. Suppose, for example, the electronic database 124 only
contains entries for active tokens 28 and 30. That is, the
electronic database 124 may only have entries for the pegged
cryptographic tokens 28 and/or the variable-priced cryptographic
tokens 30 that are approved for trading in the market exchange 32.
The token identifiers 140 of inactive or destroyed tokens 28 and
30, in other words, may not be logged in the electronic database
124. If the token identifier 140 fails to match an entry in the
electronic database 124, then exemplary embodiments may infer that
the corresponding token 28 or 30 is not authorize for trades and/or
was previously destroyed.
[0098] FIG. 27 illustrates monetary policy based on the blockchain
data layer 160, according to exemplary embodiments. As this
disclosure previously explained, exemplary embodiments may manage
the quantities of the pegged cryptographic tokens 28 and/or the
variable-priced cryptographic tokens 30 within the market exchange
32 to stabilize their respective market pricing. Moreover, as the
pegged cryptographic tokens 28 and/or the variable-priced
cryptographic tokens 30 are bought, sold, created, and destroyed,
exemplary embodiments may also generate the data records 166
representing the blockchain data layer 160 (such as the entries
190, the entry blocks 192, and/or the directory blocks 180
explained with reference to FIGS. 21-23). Exemplary embodiments may
thus deposit and/or withdraw the tokens 28 and 30 based on the
number of the entries 190, the entry blocks 192, and/or the
directory blocks 180 generated within the blockchain data layer
160. For example, as the data records 166 are generated, the
protocol server 72 may determine a rate 210 of generation. That is,
as the data records 166 are generated when or while executing the
digital contract 50, exemplary embodiments may sum or count the
entries 190, the entry blocks 192, and/or the directory blocks 180
that are generated over time (such as per second, per minute, or
other interval). Exemplary embodiments, for example, may call or
initialize a counter having an initial value (such as zero). At an
initial time (such as when the blockchain 48 is received or when a
contract identifier 212 or token identifier 140 is determined), the
counter commences or starts counting or summing the number of the
entries 190, the entry blocks 192, and/or the directory blocks 180
(generated within the blockchain data layer 160) that are commonly
associated with or reference the blockchain 48, the token
identifier 140 (perhaps according to the chain ID 174) and/or the
contract identifier 212. The counter stops counting or incrementing
at a final time and exemplary embodiments determine or read the
final value or count. Exemplary embodiments may then calculate the
rate 210 of generation as the sum or count over time.
[0099] The rate 210 of generation may thus reflect the demand 46.
As the demand 46 in the market exchange 32 increases, increasing
numbers of the electronic orders 100 are being processed
(regardless of the pegged cryptographic tokens 28 and/or the
variable-priced cryptographic tokens 30) and increasing numbers of
the data records 166 are being generated in the blockchain data
layer 160. As the rate 210 of generation increases, the
protocol-side stability application 86 may infer that the demand 46
is also increasing. The protocol-side stability application 86 may
thus cause the protocol server 72 to inspect the data records 166
to determine whether the demand 46 reflects the pegged
cryptographic tokens 28 and/or the variable-priced cryptographic
tokens 30. Once the demand 46 is clarified, the protocol-side
stability application 86 may then instruct the protocol server 72
to deposit, or to withdraw, a desired amount of the pegged
cryptographic tokens 28 and/or the variable-priced cryptographic
tokens 30 to achieve pricing stability.
[0100] The rate 210 of generation may thus be a feedback mechanism.
As the data records 166 are generated, the rate 210 of generation
of the data records 166 provides advance notice of the demand 46.
That is, the data records 166 may be generated quicker, or ahead in
time, when compared to processing of the electronic order 100,
especially if recordation to the blockchain 48 is delayed due to
miner consensus. The rate 210 of generation may thus be a precursor
or indicator for the algorithmic monetary policy performed by the
protocol server 72.
[0101] Compensation may be due. As the protocol server 72 deposits
and/or destroys the tokens 28 and 30 in the market exchange 32, a
cryptographic fee may be charged, assessed, or debited. More
cryptographic fees may be assed for generating the data records 166
in the blockchain data layer 160. The cryptographic fee may be paid
or charged in the pegged cryptographic tokens 28, the
variable-priced cryptographic tokens 30, and/or still another
cryptographic coinage.
[0102] Entry credits may be required. Exemplary embodiments may
impose or require one or more of the entry credits for depositing,
or for withdrawing, the pegged cryptographic token 28 and/or the
variable-priced cryptographic token 30 to achieve pricing
stability. The entry credits may be paid or redeemed for accessing
the market server 74 and/or for using the protocol server 72. The
entry credits (and any other cryptographic processing fees) thus
protect the blockchain environment 22 from spam, numerous
failed/fraudulent transactions, and other attacks.
[0103] Exemplary embodiments may include a cloud-based blockchain
service provided by a cloud service provider. When the creation
operation 38 or the destruction operation 40 is needed for
stability, the protocol server 72 and/or the market server 74 may
outsource or subcontract the creation operation 38 or the
destruction operation 40 to the cloud service provider. The market
server 74, for example, may generate and send a service request via
the communications network 70 to the network address (such as an
Internet protocol address) associated with the protocol server 72.
The service request may include or specify any transactional
details associated with the electronic order 100. The protocol
server 72 acts on information in the service request, creates
and/or destroys the tokens 28 and 30, generates the data records
166 in the blockchain data layer 160, and generates a service
response. The service response may simply or comprehensively detail
the creation operation 38 or the destruction operation 40. The
protocol server 72 and the market server 74 may thus cooperate in a
client/server fashion and cooperate to send, receive, and/or
generate the service request, the service response, and/or the data
records 166 in the blockchain data layer 160. A cryptographic fee
may then be charged, assessed, or debited.
[0104] FIG. 28 is a flowchart illustrating a method or algorithm
for stable pricing of cryptographic coinage, according to exemplary
embodiments. The electronic order 100 is received (Block 300). As
trades are processed, monitor market supplies and current market
values 44 (Block 302). Perform destruction operation 40 to remove
and destroy a quantity of the pegged cryptographic tokens 28 from
the market exchange 32 to stabilize its current market value 44 to
the target value 24 (Block 304). Perform creation operation 38 to
create and deposit a quantity of the variable-priced cryptographic
tokens 30 into the market exchange 32 (Block 306). The data records
166 in the blockchain data layer 160 are generated to document the
destruction operation 40 and the creation operation 38 (Block 308).
The data records 166 may be hashed (Block 310) and incorporated
into the public blockchain (Block 312).
[0105] FIG. 29 is a schematic illustrating still more exemplary
embodiments. FIG. 29 is a more detailed diagram illustrating a
processor-controlled device 350. As earlier paragraphs explained,
the protocol-side stability application 86, the market-side
stability application 86, and/or the data layer application 164 may
partially or entirely operate in any mobile or stationary
processor-controlled device. FIG. 29, then, illustrates the
protocol-side stability application 86, the market-side stability
application 86, and/or the data layer application 164 stored in a
memory subsystem of the processor-controlled device 350. One or
more processors communicate with the memory subsystem and execute
either, some, or all applications. Because the processor-controlled
device 350 is well known to those of ordinary skill in the art, no
further explanation is needed.
[0106] FIG. 30 depicts other possible operating environments for
additional aspects of the exemplary embodiments. FIG. 30
illustrates the protocol-side stability application 86, the
market-side stability application 86, and/or the data layer
application 164 operating within various other processor-controlled
devices 350. FIG. 30, for example, illustrates that the
protocol-side stability application 86, the market-side stability
application 86, and/or the data layer application 164 may entirely
or partially operate within a set-top box ("STB") or other media
player (352), a personal/digital video recorder (PVR/DVR) 354, a
Global Positioning System (GPS) device 356, an interactive
television 358, a tablet computer 360, or any computer system,
communications device, or processor-controlled device utilizing any
of the processors above described and/or a digital signal processor
(DP/DSP) 362. Moreover, the processor-controlled device 350 may
also include wearable devices (such as watches), radios, vehicle
electronics, cameras, clocks, printers, gateways,
mobile/implantable medical devices, and other apparatuses and
systems. Because the architecture and operating principles of the
various devices 350 are well known, the hardware and software
componentry of the various devices 350 are not further shown and
described.
[0107] Exemplary embodiments may be applied to any signaling
standard. Most readers are thought familiar with the Global System
for Mobile (GSM) communications signaling standard. Those of
ordinary skill in the art, however, also recognize that exemplary
embodiments are equally applicable to any communications device
utilizing the Time Division Multiple Access signaling standard, the
Code Division Multiple Access signaling standard, the "dual-mode"
GSM-ANSI Interoperability Team (GAIT) signaling standard, or any
variant of the GSM/CDMA/TDMA signaling standard. Exemplary
embodiments may also be applied to other standards, such as the
I.E.E.E. 802 family of standards, the Industrial, Scientific, and
Medical band of the electromagnetic spectrum, BLUETOOTH.RTM., and
any other.
[0108] Exemplary embodiments may be physically embodied on or in a
computer-readable non-transitory storage medium. This
computer-readable medium, for example, may include CD-ROM, DVD,
tape, cassette, floppy disk, optical disk, memory card, memory
drive, and large-capacity disks. This computer-readable medium, or
media, could be distributed to end-subscribers, licensees, and
assignees. A computer program product comprises
processor-executable instructions for pricing stability of
cryptographic coins, as the above paragraphs explain.
[0109] While the exemplary embodiments have been described with
respect to various features, aspects, and embodiments, those
skilled and unskilled in the art will recognize the exemplary
embodiments are not so limited. Other variations, modifications,
and alternative embodiments may be made without departing from the
spirit and scope of the exemplary embodiments.
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