Obfuscation of intent in transactions using cryptographic techniques

• US 10,552,829 B2
• Filed: 05/25/2016
• Issued: 02/04/2020
• Est. Priority Date: 05/26/2015
• Status: Active Grant

• Current Assignee: tZERO IP LLC (Overstock.com Incorporated)
• Original Assignee: tZERO Group, Inc.
• Inventors: Wilkins, Alec, Fish, Eric Nathaniel, Larson, Trent Norman
• Primary Examiner(s): Poinvil, Frantzy
• Application Number:
  US15/164,341
• Publication Number:
  US 20160350749A1
• Time in Patent Office: 1,350 Days
• Field of Search: 705 3- 44, 705 75
• CPC Class Codes: G06Q 20/382 insuring higher security of transaction
• CPC Class Codes: G06Q 20/401 Transaction verification
• CPC Class Codes: G06Q 2220/00 Business processing using cryptography postage metering system using cryptography G06Q2250/05
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/12 Accounting
• CPC Class Codes: H04L 2209/56 Financial cryptography, e.g. electronic payment or e-cash
• CPC Class Codes: H04L 9/50 using hash chains, e.g. blockchains or hash trees

Abstract

Methods and systems described herein prevent traders from using order intent and hardware solutions to advance their order position by obfuscating the order until execution and by using a digital ledger to assign priority of the orders. As described herein, using a series of cryptographic key pairs, one side of a transaction can be created, matched, and executed while a public record is recorded and maintained but obfuscated (i.e., not publicly transparent) until after the transaction is completed.

Claims

1. A non-transitory computer-readable storage medium including a set of instructions that, when executed by one or more processors, cause a machine to:

receive an order to trade at least one digital transactional item in exchange for at least one other digital transactional item via a trading system,

create a committed order transaction that identifies data associated with the order,

encrypt the data associated with the order using at least one credential associated with a first addressed account, wherein the at least one credential associated with the first addressed account is controlled by the trading system;

cryptographically sign the committed order transaction using at least one credential associated with a second addressed account to transfer the committed order transaction to the first addressed account;

decrypt, by the trading system, the encrypted order with another at least one credential associated with the first addressed account;

match an unencrypted order with a second order to trade at least a portion of the at least one other digital transactional item;

execute a first transaction by cryptographically transferring said portion of the at least one digital transactional item from the first addressed account and cryptographically transferring at least a portion of the at least one of the second digital transactional item to a third addressed account associated with a customer;

generate executed transaction data of the first transaction in an unencrypted format;

determine whether the order has been filled by the first transaction;

when the order has been filled by the first transaction;

send, to a distributed ledger, a request to record the executed transaction data of the first transaction in the unencrypted format;

when the order has not been filled by the first transaction;

wait until the order has been filled by the first transaction and subsequent transactions;

after the order has been filled by the first transaction and the subsequent transactions;

send, to the distributed ledger, a request to record the executed transaction data of the first transaction and of each of the subsequent transactions in the unencrypted format.

2. A computerized method comprising:

receiving an order to trade at least one digital transactional item in exchange for at least one other digital transactional item via a trading system;

creating a committed order transaction that identifies data associated with the order;

encrypting the data associated with the order using at least one credential associated with a first addressed account, wherein the at least one credential associated with the first addressed account is controlled by the trading system;

cryptographically signing the committed order transaction with at least one credential associated with a second addressed account; and

verifying, via a record recorded to a distributed ledger, that the order has been filled, wherein the record includes executed transaction data of at least a first executed transaction associated with the order in an unencrypted format, wherein the executed transaction data in the unencrypted format is not recorded until the order has been filled.

3. The computerized method of claim 2, further comprising:

sending, to the distributed ledger, a request to record the committed order transaction with the encrypted data, wherein the distributed ledger assigns a priority to the order.

4. The computerized method of claim 2, further comprising:

after the order has been verified, decrypted, matched, and executed by the trading system, receiving into a third addressed account the at least one other digital transactional items.

5. The computerized method of claim 2, further comprising:

after receiving the order to trade the at least one digital transactional item, verifying that the at least one digital transactional items are associated with a third addressed account; and

when the at least one digital transactional items are associated with the third addressed account, creating a commit transaction to cryptographically transfer the at least one digital transactional items to the first addressed account,

wherein creating the committed order transaction further comprises referencing the commit transaction in the committed order transaction to prevent the at least one digital transactional items from being referenced in a second committed order transaction.

6. The computerized method of claim 2, wherein the at least one digital transactional item comprises a digital security or a digital representation of funds, wherein the data comprises one or more of an identity of the at least one first digital transactional items, a price at which to purchase or sell the at least one first digital transactional items, and a quantity of which to purchase or sell the at least one first digital transactional items.

7. A cryptographic integration system, comprising:

at least one processor; and

at least one computer readable storage medium having instructions stored thereon, which when executed by the at least one processor cause the cryptographic integration system to;

receive an order to trade at least one digital transactional item in exchange for at least one other digital transactional item via a trading system;

create a committed order transaction that identifies data associated with the order;

encrypt the data associated with the order using at least one credential associated with a first addressed account, wherein the at least one credential associated with the first addressed account is controlled by the trading system;

cryptographically sign the committed order transaction with at least one credential associated with a second addressed account; and

verify, via a record recorded to a distributed ledger, that the order has been filled, wherein the record includes executed transaction data of at least a first executed transaction associated with the order in an unencrypted format, wherein the executed transaction data in the unencrypted format is not recorded until the order has been filled.

8. The cryptographic integration system of claim 7, wherein the instructions, which when executed by the at least one processor, further cause the cryptographic integration system to:

send, to the distributed ledger, a request to record the committed order transaction with the encrypted data, wherein the distributed ledger assigns a priority to the order.

9. The cryptographic integration system of claim 7, wherein the instructions, which when executed by the at least one processor, further cause the cryptographic integration system to:

after the order has been verified, decrypted, matched, and executed by the trading system, receive into a third addressed account the at least one other digital transactional items.

10. The cryptographic integration system of claim 7, wherein the instructions, which when executed by the at least one processor, further cause the cryptographic integration system to:

after receiving the order to trade the at least one digital transactional item, verify that the at least one digital transactional items are associated with a third addressed account; and

when the at least one digital transactional items are associated with the third addressed account, create a commit transaction to cryptographically transfer the at least one digital transactional items to the first addressed account,

wherein the instructions, that when executed by the at least one processor cause the cryptographic integration system to create the committed order transaction further cause the cryptographic integration system to reference the commit transaction in the committed order transaction to prevent the at least one digital transactional items from being referenced in a second committed order transaction.

11. A computerized method comprising:

receiving, into a first customer committed addressed account, an encrypted order to trade at least one digital transactional item in exchange for at least one other digital transactional item;

decrypting, by a trading system, the encrypted order using at least one credential associated with the first customer committed addressed account;

matching the unencrypted order with a second order to trade at least a portion of the at least one digital transactional item;

executing a first transaction by cryptographically transferring at least a portion of the at least one digital transactional items from the first customer committed addressed account and cryptographically transferring at least a portion of the at least one other digital transactional items to a first customer portfolio addressed account; and

when the order has been filled, sending, to a distributed ledger for recordation, executed transaction data of the first transaction that includes data from the order in an unencrypted format to allow for third party verification of the order and the trade.

12. The computerized method of claim 11, wherein the encrypted order is recorded to the distributed ledger that assigns a priority to the encrypted order based on a time of receipt at the distributed ledger, and wherein matching the unencrypted order with the second order is based on the assigned priority.

13. The computerized method of claim 11, further comprising verifying a sender of the encrypted order using a credential of a broker-dealer account, wherein the credential is a public key.

14. The computerized method of claim 11, further comprising executing a second trade by cryptographically transferring a second portion of the at least one digital transactional item, wherein the executed transaction data includes data from both the trade and the second trade.

15. A trading system, comprising:

at least one processor; and

at least one computer readable storage medium having instructions stored thereon, which when executed by the at least one processor causes a cryptographic integration system to;

receive, into a first customer committed addressed account, an encrypted order to trade at least one digital transactional item in exchange for at least one other digital transactional item;

decrypt, by a trading system, the encrypted order using at least one credential associated with the first customer committed addressed account;

match the unencrypted order with a second order to trade at least a portion of the at least one digital transactional item;

execute a first transaction by cryptographically transferring at least a portion of the at least one digital transactional items from the first customer committed addressed account and cryptographically transfer at least a portion of the at least one other digital transactional items to a first customer portfolio addressed account; and

when the order has been filled, send, to a distributed ledger for recordation, executed transaction data of the first transaction that includes data from the order in an unencrypted format to allow for third party verification of the order and the trade.

16. The trading system of claim 15, wherein the encrypted order is recorded to the distributed ledger that assigns a priority to the encrypted order based on a time of receipt, and wherein matching the unencrypted order with the second order is based on the assigned priority.

17. The trading system of claim 15, wherein the instructions, which when executed by the at least one processor, further cause the trading system to verify a sender of the encrypted order using a credential of a broker-dealer account, wherein the credential is a public key.

18. The trading system of claim 15, wherein the instructions, which when executed by the at least one processor, further cause the trading system to execute a second trade by cryptographically transferring a second portion of the at least one digital transactional item, wherein the executed transaction data includes data from both the trade and the second trade.