AU2019100754A4

AU2019100754A4 - A Method of Transferring Funds and Exchanging Currency

Info

Publication number: AU2019100754A4
Application number: AU2019100754A
Authority: AU
Inventors: York Wu
Original assignee: Individual
Current assignee: Individual
Priority date: 2019-07-11
Filing date: 2019-07-11
Publication date: 2019-08-22
Anticipated expiration: 2027-07-11

Abstract

Abstract The present application discloses a computerised method of creating an improved funds transfer and currency exchange system consisting of a combination of: a blockchain or distributed ledger system, an artificial intelligence system, a dynamic synthetic currency, and a trade matching algorithm.

Description

Exchanging and Transferring Funds

Technical Field [001] The present invention relates to the field of security technology.

Background [002] A person or organisation seeking to transfer money from one jurisdiction to another, or from one currency to another, or both, is presently faced with a plethora of options offered by a variety of financial institutions and money exchanges, with the SWIFT system being the main method used to facilitate the international transfers of funds between international banking institutions.

[003] Whilst the SWIFT system has proven to be an effective and relatively simple system to date for many applications, the method does however have a number of significant issues. SWIFT is not a funds transfer or a currency exchange system per se, SWIFT is in fact simply a secure form of messaging between banks that then enables banks to undertake the additional steps required to facilitate a funds transfer. As only banks or their affiliates are allowed to become part of the SWIFT (messaging) system, this means that the reach of the SWIFT system

2019100754 11 Jul 2019 is limited to areas where the banking system is well established. For any payment to occur in the first instance, the two participating banks on either side of the transaction must first agree to a funds transfer via SWIFT messaging, and then the banks involved in the transaction must further hold nostro and vostro accounts with each other, a condition that is not always met. Further, once a SWIFT payment order is sent from Bank-A to Bank-B, Bank-A and Bank-B are still then required to settle the respective nostro and vostro accounts before the transferred funds can become available to End User, a process that can take from one to several days.

[004] Where the person seeking to transfer funds or exchange currency from one rarely traded jurisdiction to another rarely traded jurisdiction, generally a complex series of foreign exchange transactions denominated in major trading currencies must additionally occur before the funds can arrive at the required destination in the currency needed. This can be a slow and expensive process.

[005] For highly traded currencies the currency trading process is competitive and liquid, which means that money changing costs and delays occur which, whilst far from ideal, can normally be kept within reason. However, for currencies that are not frequently traded by the banking system, such as African currencies, and for jurisdictions where the reach of the banking system is somewhat limited, such as Africa, the cost of trading currencies and moving money across jurisdictions becomes an exceedingly slow and expensive proposition. For example, it is typical for a person in an African country with an African currency, to lose up to 30% or more of their funds, when say attempting to pay an Australian based company with Australian Dollars. In addition, the process of moving the funds from one jurisdiction to another and from one currency to another can take three weeks or even longer. The same issues arise when say an Australian company is seeking to pay an African company in the African company’s local currency.

2019100754 11 Jul 2019 [006] Non-bank private companies provide an alternative means of moving funds between different jurisdictions and between different currencies and such services are widely used around the world. At least one such company that provides such services boasts of having more than 500,000 agents globally that are located in 200 different countries. However, the practical utility of using such systems to move money into and out of jurisdictions such as Africa is even lower than that of the SWIFT banking transfer system, as costs associated with the use of such non-bank services are often prohibitive.

[007] Crypto currencies are commonly touted as the ideal trans-jurisdictional payment system as crypto currencies are not denominated in national currencies that need to be exchanged from one national fiat currency to another in order to make a payment or settle an account. However, despite the decade of media attention directed at the crypto currency sector since the advent of Bitcoin in 2009, crypto currencies remain a niche activity to this day and are certainly not generally accepted as a means of payment or settlement of account around the world. Further, trading in crypto currencies has been banned by some countries, most notably China, which severely limits the current utility and future prospects of using crypto currency as a globally accepted form of payment and settlement of account. Further still, the typical wild variation in the exchange rate of crypto currencies relative to national fiat currencies, means that the general acceptability of crypto currencies as an international means of payment and of settlement of account, is likely to remain at best a long-term prospect.

[008] What is required therefore is a novel technical approach to the problem of securely transferring national fiat currency denominated funds between one jurisdiction and another, and of exchanging one national fiat currencies to another fiat currency, which completely bypasses the numerous fundamental limitations of the current state of the art.

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Summary of Invention

Technical Problem [009] A distributed ledger or blockchain system (henceforth a blockchain system) is used to immutably record all activity within the currency exchange and funds transfer systems, in order to generate trust in the system and its operations.

[010] The blockchain system can, for example, record data such as, account balances, messages, orders, purchases, sales, funds transfers and essentially any other data that enters, exits the currency exchange and funds transfer system, or that is generated by the currency exchange and funds transfer system.

[Oil] A blockchain is able to ensure the immutability of data over time by recording digital signatures of past data blocks, into new data blocks as the new data blocks are written. A blockchain is further able to ensure the immutability of data across space, via the mechanism of being composed of a multiple of widely distributed blockchain nodes, which each carry a fully redundant copy of all of the blockchain data. A blockchain is able to ensure still further immutability of its data, via the mechanism of the blockchain having multiple owners, as having different blockchain nodes owned by different owners ensures that no single person or entity is able to unilaterally alter the contents of the blockchain.

[012] A conventional public blockchain system such as the Ethereum blockchain seeks to incorporate as large a number of public nodes into the chain as possible in order to maximize security of the data stored within the chain. The underlying assumption in such a strategy is that the larger the number of nodes and node owners that are incorporated into the public blockchain system, the less likely it becomes that a cabal of bad actors will be able to overwhelm the blockchain consensus system by sheer force of numbers. Unfortunately for proponents of this strategy, as the population of blockchain nodes increases, so does the time

2019100754 11 Jul 2019 required for the public blockchain to reach consensus, which in turn drastically reduces the processing speed of the blockchain system and therefore the blockchain’s commercial utility. Further, in public blockchain systems, data stored within the public blockchain is designed essentially to be stored in perpetuity, even though for many types of data, perpetual storage is simply not needed. This means that as time progresses the cost of storing the blockchain data increase needlessly, simply to store data that is no longer of use to anyone. Further still, public blockchain architectures is based on storing data in the form of files. For applications that seek to frequently store tiny parcels of data into database like data structures, file-based storage formats are exceedingly inefficient. Yet still further, a public blockchain system is designed to be all things to all people. As with any system design, imposing a broad range of design requirements into the design essentially ensures that the system cannot be optimised for any specific application.

[013] Public blockchain systems are therefore poorly suited for commercial applications that require the blockchain to operate at exceedingly high speeds, and or at exceedingly low cost, and or with high resource efficiency. In fact, public blockchain systems have become infamous for their inability to run at what are currently considered commercially viable speeds. For example, the Ethereum blockchain system rarely exceeds a processing speed of five transactions per second, whereas the VISA credit card transaction system is reported to be capable of operating at over 24,000 transactions per second.

[014] In addition, a public blockchain system operates on the basis that node owners are rewarded for their participation in the chain. Typically, this is achieved by paying the node operators using the blockchain’s crypto currency. However, history as demonstrated that the exchange values of crypto currencies are extraordinary volatile with respect to the major fiat currencies, with price fluctuations of several orders of magnitude being experienced over the course of weeks or even days or hours. This means that a person seeking to use the services of

2019100754 11 Jul 2019 a public blockchain system as the basis of method exchange currencies and transfer funds in a secure, high-speed and low-cost manner, faces the prospect of their costs to access the blockchain system increasing by a hundred time or even more overnight. Clearly this is not a commercially viable situation.

[015] Further, public blockchain systems typically secure the blockchain using a ‘proof of work’ methodology. A fundamental characteristic of ‘proof of work’ is that it is quite deliberately designed to be wasteful of computer processing power, and energy. For example, as of 2017 it has been estimated that the Bitcoin blockchain based cryptocurrency system alone consumed 0.14% of the world’s entire energy usage. In return for this extraordinary level of energy and processing power usage, the Bitcoin system on average produced five transactions per second, and wrote a new block of data approximately every 10 minutes. Such a wasteful expenditure of energy and processing resources is simply not commercially viable.

[016] What is required therefore is an adapted blockchain system that is specifically designed to meet the needs of a currency exchange and funds transfer system, from the perspective of low-cost, security, high- speed, blockchain access price stability, and resource efficiency.

Solution to the Problem

Description of Embodiments [017] The present method teaches a means of creating a currency exchange and funds transfer system based on the following method.

[018] A specific type of blockchain or distributed system as described later herein is combined with an Al or machine learning systems as also described later herein. The present invention teaches that only specific types of blockchain or distributed ledger are suitable for the method taught by the present invention, and that in fact other types of blockchain or distributed ledger are by nature antithetical to the requirement of the present invention. The present invention

2019100754 11 Jul 2019 then teaches a novel method of combining, a currency exchange and funds transfer based on the use of a synthetic currency, and a trade matching algorithm, which then provides the present invention with the ability to execute trades in a manner that is at once significantly cheaper and faster than traditional currency exchange and funds transfer approaches.

[019] The present invention teaches away from the use of public blockchain systems for the purpose of creating a currency exchange and funds transfer system and instead teaches the use of another specific type of blockchain system.

[020] The present invention teaches the use of a private or consortium blockchain system for the currency exchange and funds transfer system, where the number of blockchain nodes is kept relatively small when compared to a public blockchain system. By limiting the number of nodes in the private or consortium blockchain system, the blockchain is able to reach consensus quickly, thereby ensuring the delivery of high processing speeds for the expenditure of a relatively modest amount of processing power and energy.

[021] In addition, the present invention teaches that the private or consortium blockchain system nodes used for the currency exchange and funds transfer system, should ideally be further owned and operated wholly within an industry sector. For example, the private or consortium blockchain system used in a secure and high-speed currency exchange and funds transfer system, should ideally be owned and by people and or organisations that are involved in the secure and high-speed exchange of currencies and transfer of funds. By ensuring that the consortium blockchain nodes are only operated by people or organisations with a trusted pedigree and a common interest in the security of financial transactions, the security of the entire blockchain can be made exceedingly high by using a relatively small number of trusted and prequalified nodes. Similarly, the use of a dedicated private consortium blockchain enables

2019100754 11 Jul 2019 a high degree of specialisation of the blockchain configuration and set-up, which in turn enables further increases in blockchain processing speed and efficiency.

[022] In addition, the present invention teaches away from the permanent storage of data within the consortium blockchain system used for the currency exchange and funds transfer system. Financial records are normally only kept for a statutory period, which is typically seven years.

[023] Therefore, burdening a blockchain system with records that are older than the statutory period simply increases the cost of the blockchain storage, without imparting any value for uses of the blockchain system and its associate currency exchange and funds transfer system.

[024] The present invention teaches that all records stored within the consortium blockchain method should ideally be purged after a suitable period, say seven years, from the blockchain system. By ensuring the that only relevant and legally enforceable records are kept on the electronic funds transfer and exchange system consortium blockchain system, the present invention teaches a method that is at once efficient and fast, and avoids the expense of perpetually storing data that has no practical value.

[025] The present invention additionally teaches a method where the speed, security and resource efficiency of the blockchain system used in the currency exchange and funds transfer system is augmented via the use of Al or machine learning methods (henceforth Al).

[026] By using Al approaches to manage the data flows into the currency exchange and funds management system, and its associated blockchain, the currency exchange system and funds transfer system is able to detect data anomalies that could negatively impact the speed, security, or efficiency of the currency exchange system and or its associated blockchain system.

[027] A sample of vetted high-quality blockchain data is used to train an Al application that is imbedded within the blockchain architecture used within the currency exchange and funds transfer system. The training set of data can consist of good-data, that is data that is deemed

2019100754 11 Jul 2019 desirable. The Al good-data trained system monitors data being input into the blockchain system and rejects data that is not deemed as good data. Additionally, the training set of data can consist of bad-data, that is examples of data that is undesirable. In this instance the Al baddata trained system monitors the data being input into the blockchain system and rejects inbound data that is deemed as bad data. Both good-data trained Al and bad-data trained Al can be used to monitor data that is being input into the blockchain system.

[028] Ideally but not necessarily, the Al training set data will contain a wide variety of input characteristics. More ideally the Al training set data may include inputs that may not appear immediately significant to the functioning of the secure, high-speed, exchange and funds transfer system, and or its associated blockchain. For example the Al training set may disparate data such as: size of transaction, currency pairs involved in the transaction, geographical original of the account owners, time of day, day of week, month, duration since last transaction, zip codes of account owners, forex exchange rates, stock market statistics, interest rates, balance of payments data, etc.

[029] The ability of Al to exploit widely disparate sources of data and to detect often complex relationships between such disparate sources of data, which would elude detection by even the most accomplished human analysts, and to do so continuously in real time with minimal cost, provides the present invention with a means of vetting data being input into the currency exchange and funds transfer system, and its associated blockchain system, which cannot be replicated via the use of conventional algorithmic programming methods.

[030] The present invention further teaches that the Al application can be trained on data that describes the blockchain’s operating status in order to monitor and manage the blockchain’s operations in real time. For example, a training set of data that represents acceptable blockchain performance is used to train the Al application. The training set could include, but is not limited

2019100754 11 Jul 2019 to, information as diverse as: blockchain speed, node activity, node communications status, input requests, hardware temperatures, resource utilization, time, day of week, month, data volumes, currency pairs being transacted, etc. The now trained AI application is integrated within the blockchain system to monitor the blockchain operation. When the AI application detects an operational anomaly, warning messages are sent to the chain node operators to notify them of the anomalous situation, which could indicate a hardware malfunction, a software malfunction, or a security issue.

[031] The present invention teaches that database-like data operations can be incorporated into the blockchain architecture to significantly reduce the cost and time overheads associated with storing small parcels of data into databased like environment. Presently, users of blockchain systems typically store their data in file structures. Files are efficient data storage structures for many forms of digital data that are in use today, however when it comes to the frequently updating small amounts of data in databased like structure, for example storing time sequence data from an IOT sensor, or time sequences of currency exchange prices, files are not resource efficient data structures.

[032] The present invention teaches the creation of a synthetic currency within the currency exchange and funds transfer system. This synthetic currency will henceforth be denoted as the Synthetic Currency.

[033] The present invention additionally teaches that the Synthetic Currency cannot be exported from the currency exchange and funds transfer system. That is, the Synthetic Currency is local to the currency exchange and funds transfer system.

[034] The present invention further teaches that the Synthetic Currency can be dynamically created or destroyed by the currency exchange and funds transfer system in order to increase or decrease liquidity in the exchange system.

2019100754 11 Jul 2019 [035] Still further, present invention teaches that the value of the Synthetic Currency is optionally tethered to another currency, typically a national fiat currency such as, but not limited to, the US Dollar. Alternatively, the value of the synthetic currency can be tethered to a basket of major national fiat trading currencies. Typically, the tether between the Synthetic Currency and its target fiat currency or target basket of fiat currencies, will be maintained via the dynamic creation or destruction of the Synthetic Currency, usually in real time. That is to say, where the value of the Synthetic Currency begins to climb higher than say, for example, the US Dollar, the currency exchange and funds transfer system will dynamically create additional Synthetic Currency in order to increase liquidity and maintain parity with the US Dollar. Similarly, where for example the value of the Synthetic Currency drops below say the US Dollar, the currency exchange and funds transfer system will dynamically in real time destroy stocks of the Synthetic Currency in order to maintain parity of the Synthetic Currency with the US Dollar.

[036] The present invention additionally teaches a method where account owners can exchange fiat currency for Synthetic Currency, and Synthetic Currency for fiat currency.

[037] Further, the present invention teaches that Account owners are able to transfer funds denominated in either fiat currency or Synthetic Currency to other account owners.

[038] Yet still further, the present invention teaches a method where buyers and sellers of fiat currencies or Synthetic Currency can post their bid and ask prices to ledger that is visible to all account owners and is updated in real time.

[039] User accounts are set up within the currency exchange and funds transfer system to record balances of fiat currencies and of the Synthetic Currency.

2019100754 11 Jul 2019 [040] Account balances, communications, orders, instructions, prices, and internal status logs of the currency exchange and funds transfer system, are recorded in a specific type of highly optimised blockchain system, as described previously.

[041] Al is used to monitor data input into the currency exchange and funds transfer system and or its associated blockchain system. Al is also used to monitor the internal operating status of the funds transfer and exchange system and its associate blockchain system.

[042] Ideally, but not necessarily, User accounts may also take the form of a Soft Wallet or a Hard Wallet, or a combination of the two.

[043] The present invention teaches that the Synthetic Currency is the medium of exchange in all fiat or crypto currency exchanges within the currency exchange and funds transfer system.

[044] For example, an Account Owner wishing to exchange say South African Rand for US Dollars, would first exchange their South African Rand for Synthetic Currency, and then exchange their stock of Synthetic Currency for US Dollars.

[045] In operation this process would be fully automated and executed in as near real time as possible. So, for example, the Account Owner would simply input their desired currency exchange pair, say South African Rand to US Dollar, together with the volume Rand to be exchanged, and the asking price for the sale of their stock for Rand. The automated currency exchange and funds transfer system would then complete the required Rand to Synthetic Currency transaction, and the partnering Synthetic Currency to US Dollar transaction, in as near to real time as possible.

[046] As the two partnering transactions are conducted in near real time, and as the intermediate Synthetic Currency is dynamically generated or destroyed in order to maintain its tether with say the US Dollar or a basket of major trading currencies, there is essentially no upside or downside to the temporary existence of the Synthetic Currency.

2019100754 11 Jul 2019 [047] The currency exchange and funds transfer system scans account owner bids and asking prices for fiat currency swap pairs.

[048] Where the currency exchange and funds transfer system detect the incidence of multiple matching bid and ask orders, the system prioritises orders based on the time that the orders were placed into the system.

[049] Ideally but not necessarily, the present invention teaches the use of a currency exchange and funds transfer method that combines the hitherto separate processes of currency exchange and funds transfer into a single unified transaction. By doing so the present invention is able to significantly increase the efficiency and speed of currency exchange and funds transfer processes, in suitable conditions, so that the cost of executing the currency exchange and funds transfer process becomes almost negligible when compared to the current state of the art. More specifically the present invention teaches the following method. For example, an Account Owner has an account with South African Rand and wishes to pay a second Account Owner in US Dollars. A third account Owner has an account in US Dollars and wishes to pay a fourth account owner in South African Rand. For the sake of convenience all of the amounts in this non-limiting example are made equal in terms of US Dollars and the amount involved is US$100. The present invention teaches that all of the amounts to be transacted are first converted into Synthetic Currency, which for the sake of convenience in this example is made equal in value to the US Dollar. The present invention in this example then determines that there is fiat currency match between the first, second, third, and forth Account Holders’ proposed transactions, in that on balance the net movement of fiat currency in these transactions between South African Rand and US Dollars is zero. That is to say in this non-limiting example, there is the same value of Rand being converted into US Dollars, as there is US Dollars being converted into South African Rand.

2019100754 11 Jul 2019 [050] The present invention then transfers the value of US$100 in Synthetic Currency from the first Account Holder to the fourth Account Holder, whilst transferring the value of US$100 in Synthetic Currency from the third Account Holder to the second Account Holder. The Synthetic Currency holding of the third Account Holder are then automatically transferred back into South African Rand, whilst the Synthetic Currency holding of the second Account Holder are automatically transferred into US Dollars. The account holders are not necessarily aware of the existence of the Synthetic Currency used to facilitate the four-way trade. In effect, the first account holder directly pays the fourth account holder using South African Rand that was already present in the account of the first Account Holder. Similarly, the third Account Holder pays the second Account Holder using US Dollars that were already present in the account of the third Account Holder. By avoiding the need to effectively transact payments through the existing fiat currency, currency exchange systems, the present invention is able to effectively exchange currencies and transfer funds between fiat currency in a way that is vastly cheaper and more efficient than the prior art. The present invention teaches still further that numbers of transactions can be combined in instances where there are no exact matching transactions.

Elaborations of the Present Invention

Elaboration 1 [0051] Owner A has an account containing Fiat Currency A. Owner A wishes to pay Owner B who is located in a different jurisdiction to Owner A, with B amount of Fiat Currency B.

[052] Owner A places an order with the system to pay Owner B, a B amount of Fiat Currency B, using Owner A’s account containing an amount of Fiat Currency A.

[053] The currency exchange and funds system scans the exchange rate between Fiat Currency

B to Synthetic Currency, and the exchange rate between Synthetic Currency and Fiat Currency

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A, in order to determine how much Fiat Currency A will be required to purchase B amount of

Fiat Currency B. Let us call this required amount of Fiat Currency A, A amount. Let us also call the required amount of Synthetic Currency, S amount.

[054] The system then reserves A amount of Fiat Currency A from Owner A’s account.

[055] The system then offers for sale A amount for Fiat Currency A in exchange for S amount of Synthetic Currency.

[056] Account Owner C has an account containing Synthetic Currency.

[057] Owner C agrees to purchase A amount of Fiat Currency A in return for S amount of Synthetic Currency.

[058] The currency exchange and funds system transfers A amount of Fiat Currency A into the account of Owner C, whilst simultaneously moving S amount of Synthetic Currency into the account of Owner A.

[059] Account Owner A now holds S amount of Synthetic Currency.

[060] The system then automatically transfers S amount of Synthetic Currency from the account of Owner A to the account of Owner B.

[061] Owner B has now been paid; however, the payment is in Synthetic Currency and Owner B only wants payment in Fiat Currency B, not Synthetic Currency.

[062] The system then offers for sale S amount of Synthetic Currency in return for B amount of Fiat Currency B.

[063] Account Owner D wishes to purchase Synthetic Currency and has an account containing B amount of Fiat Currency B.

2019100754 11 Jul 2019 [064] The system automatically transfers B amount of Fiat Currency B into the account of

Owner A, whilst simultaneously transferring S amount of Synthetic Currency into the account of Owner D.

[065] The process of transferring the funds from Owner A denominated in Fiat Currency A, to Owner B denominated in Fiat Currency B, has now been completed automatically.

[061] The existence of the Synthetic Currency is largely invisible to Owner A and Owner B.

Elaboration 2 [066] Owner A, decides to pay Owner, B using Fiat Currency B.

[067] Owner A therefore nominates a price and volume of Fiat Currency A that they are willing to sell in return for a volume of Synthetic Currency.

[068] The fact that the value of Synthetic Currency is tethered to another currency, typically a national fiat currency such, as but not limited to, the US Dollar, or alternatively that the value of the Synthetic Currency is tethered to a basket of major national fiat trading currencies, means that Owner A is able to optionally use the spot currency exchange rate between Fiat Currency A and Fiat Currency B to determine how much Fiat Currency A to sell in return for specific volume of Synthetic Currency.

[069] Owner C has accounts containing stocks of Synthetic Currency and wishes to purchase a volume of Fiat Currency A.

[070] Owner C nominates the volume of Synthetic Currency, and a price or price range that they are willing to sell their stocks of Synthetic Currency in return for stocks of Fiat Currency A. Owner C will be guided in setting their selling price of Synthetic Currency relative to Fiat Currency A, by the fact that the value of the Synthetic Currency is tethered to another currency,

2019100754 11 Jul 2019 typically a national fiat currency such as but not limited to the US Dollar, or alternatively the value of the Synthetic Currency is tethered to a basket of major national fiat trading currencies.

[071] The funds transfer system continually scans owner accounts for matching orders to buy and sell fiat currency in return for Synthetic Currency.

[072] The funds transfer system records the prices and volumes that that account owners are willing to sell their stocks of fiat currency, in return for Synthetic Currency.

[073] If the funds transfer system finds a matching buy and sell price and a matching volume of Synthetic Currency and of Fiat Currency A, then the system transfers ownership of the appropriate volume of both the Synthetic Currency and Fiat Currency A into separate Holding [074] Accounts and records the agreed upon exchange rate or price.

[075] Where the funds transfer system detects multiple matching buy and sell orders, then the system prioritises orders based on the time that orders were posted to the system.

[076] The Synthetic Currency contents of the Holding Account are then transferred to Owner A, and the Fiat Currency contents of the other Holding Account are then transferred to Owner C.

[077] Account Owner A is now in possession of the required volume of Synthetic Currency to pay Owner B. Owner A’s stock of Synthetic Currency are being kept stable by tying its value to the US Dollar, or by tying its value to a basket of trading fiat currencies.

[078] Account Owner A then transfers the required amount of Synthetic Currency to the account of Owner B, but Owner B requires payment in Fiat Currency B not Synthetic Currency.

[079] Owner B is however willing to temporarily accept payment in Synthetic Currency because (i) the exchange rate between Synthetic Currency and Currency B is well known, (ii) the value of Synthetic Currency is kept relatively stable by tying the value of Synthetic

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Currency to either the US Dollar or to a basket of trading currencies, (iii) the Synthetic

Currency account can be automatically traded into Fiat Currency B in near real time or in minutes (rather than days or weeks with the current state of the art methods), which effectively removes the risk of a major exchange rate adjustment occurring in that time.

[080] Account Owner B then offers for sale their stocks of Synthetic Currency received from Owner A, in return for the required volume of Fiat Currency B. Owner B’s account can be guided in its setting of a selling price of Synthetic Currency relative to Fiat Currency B, by the fact that the value of the Synthetic Currency is tethered to another currency, typically a national fiat currency such as but not limited to the US Dollar, or alternatively the value of the Synthetic Currency is tethered to a basket of major national fiat trading currencies. However, given that Owner A originally used the fact that the value of Synthetic Currency is tethered to another currency, typically a national fiat currency such as but not limited to the US Dollar, or alternatively the value of the Synthetic Currency is tethered to a basket of major national fiat trading currencies, to determine the volume of Synthetic Currency to send to Owner B, in operation the account of Owner B would already contain the correct amount of Synthetic Currency needed to obtain the required amount of Fiat Currency B.

[081] Owner D has a stock of Fiat Currency B and is seeking to purchase Synthetic Currency. Owner D may be seeking stocks of Synthetic Currency in order to purchase Fiat Currency D.

[082] The funds transfer system continually scans owner accounts for orders to buy and sell fiat currency in return for Synthetic Currency.

[083] The funds transfer system records the prices and volumes that that account owners are willing to sell their stocks of fiat currency, in return for Synthetic Currency.

[084] If the funds transfer system finds a matching buy and sell price of a volume of Synthetic

Currency and of Fiat Currency B, then the system transfers ownership of the appropriate

2019100754 11 Jul 2019 volume of both the Synthetic Currency and Fiat Currency B into separate Holding Accounts and records the agreed upon exchange rate or price.

[085] Where the funds transfer system detects multiple matching buy and sell orders, then the system prioritises orders based on the time that orders were posted to the system.

[086] The Fiat Currency B contents of the Holding Account are then transferred to Owner B and the Synthetic Currency contents of the other Holding Account are then transferred to Owner D.

[087] Owner B is now in possession of the required amount of Fiat Currency B, which was originally paid into the funds transfer system by Owner A using Fiat Currency A.

Elaboration 3 [088] Owner A has stocks of Fiat Currency A that they wish to exchange for Fiat Currency B. Owner B has stocks of Fiat Currency B that they wish to exchange for Fiat Currency A. Both Owner A and Owner B are aware of the spot exchange rate of Fiat Currency A and Fiat Currency B, so they use the spot exchange rate to set the price for the sale of their fiat currency stocks.

[089] However, at the time of the proposed fiat currency exchange, no Synthetic Currency is being offered for sale.

[090] The currency exchange and funds transfer system is continually scanning the account owner buy and sell orders and detects that there is a potential trade between Owner A and Owner B. The currency exchange and funds transfer system furthermore detect that there is no Synthetic Currency currently offered for sale at that time, which could facilitate the desired trade. The currency exchange and funds transfer system is still further aware that the reciprocal

2019100754 11 Jul 2019 fiat currency exchange between Owner A and Owner B could be accomplished in near real time.

[091] The funds transfer system therefore dynamically creates the required amount of Synthetic Currency in order to facilitate the trade between Owner A and Owner B.

[092] The funds transfer system dynamically creates the required amount of Synthetic Currency to enable the trade between Owner A and Owner B to occur.

[093] As soon as the trade between Owner A and Owner B is complete, the funds transfer system dynamically destroys the volume of Synthetic Currency created for the Owner A and Owner B fiat currency exchange.

[094] The entire process is completed in an exceedingly short period of time, ideally less than a second.

Elaboration 4 [095] The funds transfer system monitors the spot price of an external currency, say the US Dollar, or the value of a basket of major currencies. The funds transfer system determines that the exchange rate between for example the US Dollar and the Synthetic Currency has moved.

[096] The funds transfer system therefore creates or destroys stocks of Synthetic Currency to alter the balance between supply and demand in order to ensure that the value of the Synthetic Currency stays tethered to the US Dollar.

Conclusion

2019100754 11 Jul 2019 [097] The present invention teaches a novel method of creating a secure high-speed currency exchange and funds transfer system: via the use of specific types of blockchain architectures, the application of Al to monitor and control data inputs and other system operations, via the combination of a dynamically created and destroyed internal currency the value of which is tied to the value of say the US dollar or a basket of major international trading currencies, and, ideally but not necessarily via the use of a transaction matching algorithm that effectively combines the processes of currency exchange and funds transfer into a single transaction.

[098] Via the use of specific types of blockchain architectures (and teaching away from others) the present invention teaches a means of currency exchange and funds transfer that can remove many complex and expensive processes that currently inflate the cost of currency exchanges and funds transfers, especially for infrequently traded currencies, such as African currencies.

[099] The present invention teaches away from the use of public blockchain systems for use in a secure high-speed currency exchange and funds transfer system as the innate characteristics of public blockchain systems are antithetical to the efficient high-speed operation and commercial viability of a secure high-speed currency exchange and funds transfer system.

[100] In order to increase the speed, efficiency and security of the currency exchange and funds transfer system, the present invention teaches the use of Al techniques to monitor and control the inflow of data into the currency exchange and funds transfer system and or its associated blockchain system, and or, the use of Al techniques to monitor and control the operating status of the currency exchange and funds transfer system and or its associated blockchain.

[101] In order to still further increase the speed and efficiency of the currency exchange ad funds transfer system, the present invention teaches the use of a transaction exchange matching system.

2019100754 11 Jul 2019 [102] The present invention thereby teaches a method of creating a currency exchange and funds transfer system that is ideally suited to the needs of infrequently traded currencies, such as African currencies. The method taught by the present invention is exceedingly secure, and typically up to an order of magnitude or more, faster and lower cost, than say the SWIFT system for such applications.

Claims

Claims

1 A computerised method of creating an improved funds transfer and currency exchange system consisting of a combination of: a blockchain or distributed ledger system, an artificial intelligence system, a dynamic synthetic currency, and a trade matching algorithm
2 A method according to claim 1 wherein the artificial intelligence system monitors and controls the quality of data entering the blockchain system.
3 A method according to claim 1 wherein the artificial intelligence system monitors and controls the operation of the blockchain system
4 A method according to claim 1 wherein the blockchain or distributed ledger is not a public blockchain or distributed ledger
5 A method according to claim 1 wherein the synthetic currency is dynamically created and or destroyed within the computerised funds transfer and currency exchange system.