Blockchain Technology for Digital Currency: Encryption, Payment, Query, and Submission Methods

Introduction to Blockchain-Based Digital Currency Systems

Modern financial systems increasingly rely on blockchain technology to facilitate secure digital currency transactions. This comprehensive guide explores advanced cryptographic methods for:

• Currency issuance and encryption
• Secure payment processing
• Transaction querying mechanisms
• Regulatory submission protocols

Core Cryptographic Methods for Digital Currency Issuance

Super Node Encryption Protocol

Step 1: Secret Random Number Generation

r₁ = OneWayFunction(SK₁[partial] + χ)

Where:

• SK₁ = Super node private key
• χ = Optional random value
• OneWayFunction = Cryptographic hash or discrete logarithm operation

Step 2: Currency Issuance Ciphertext Creation

C₀ = Encrypt(M₀, r₁, PK₂[partial])

Using discrete logarithm-based encryption with:

• M₀ = Digital currency amount
• PK₂ = Receiving node's public key

Step 3: Issuance Signature Generation

σ₁ = Sign(SK₁[partial], C₀)

Creates unforgeable proof of legitimate issuance

Step 4: Blockchain Broadcast
Packet contains {C₀, σ₁, PK₁, PK₂} for network verification

Transaction Query Mechanisms

Super Node Query Protocol

Authentication Flow:

1. Regenerate r₁ using stored SK₁
2. Query blockchain for C₀ using PK₁/PK₂ identifiers

3. Decrypt using:

   M₀ = Query(C₀, r₁, PK₂[partial])

Key Advantages:

• Eliminates need to store plaintext currency values
• Reduces secret random number storage requirements
• Leverages blockchain's immutable ledger properties

Payment Processing Framework

Debt Node Payment Procedure

Session Key Establishment:

r₀ = KeyGen(SK₂₁[partial], PK₁[partial])

Payment Ciphertext Generation:

C₁ = Encrypt(M₁, r₁, PK₂₂[partial])

Where:

• M₁ = Payment amount
• PK₂₂ = Creditor node's public key

Verification & Broadcast:

• Generate payment signature σ₂
• Transmit {C₁, σ₂, PK₂₁, PK₂₂}

Payment Verification Systems

Debt Node Query Method

1. Reconstruct session key r₀
2. Locate C₁ via blockchain query

3. Decrypt using:

   M₁ = Query(C₁, r₁, PK₂₂[partial])

Super Node Oversight

Regulators can independently verify payments using:

1. Shared session key derivation
2. Blockchain-stored payment records
3. Discrete logarithm decryption

Regulatory Submission Protocols

Node Reporting Procedure

Submission Workflow:

1. Generate r₁ from node's SK₂

2. Create regulatory ciphertext:

   C₂ = Encrypt(M₂, r₁, PK₁[partial])

3. Attach submission signature σ₃
4. Broadcast to blockchain network

Compliance Query Process

Authorized nodes can:

1. Retrieve C₂ from blockchain
2. Regenerate r₁ using private key
3. Decrypt regulatory reports

Frequently Asked Questions

Q1: How does this system prevent double-spending?

A: Each transaction creates immutable blockchain records with cryptographic proof of validity, enabling network-wide consensus verification.

Q2: What makes the secret random number secure?

A: r₁ derives from private keys through one-way functions, making reverse-engineering computationally infeasible while allowing authorized regeneration.

Q3: How do regulators access transaction details?

A: Super nodes maintain privileged access through cryptographic key relationships while ordinary nodes only see encrypted data.

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Q4: Can this system handle high transaction volumes?

A: Yes, the distributed nature of blockchain combined with efficient cryptographic operations enables scalable throughput.

Implementation Considerations

System Initialization

1. Parameter Generation:

   SP = (G, p, g) ← SysGen(1^λ)

2. Key Distribution:

   • Nodes select private keys α
   • Compute public keys g^α

Node Enrollment

1. Certificate issuance by blockchain authority

2. Identity verification via:

   Verify(SP, PK₃, PKᵢ, Certᵢ)

Technical Advantages Summary

Conclusion

This framework establishes a robust infrastructure for blockchain-based digital currency systems that balances:

• Strong cryptographic security
• Regulatory oversight capabilities
• Efficient transaction processing
• Scalable architecture

The combination of advanced encryption methods with blockchain's distributed ledger properties creates a foundation for next-generation financial systems.

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