AU2018100999A4 - Integration of Cryptocurrency Splitting Technology, Highly Scalable Blockchain Network and Mirror Advertising Technology for transparency of Business Operations and Taxation - Google Patents

Abstract

We have developed Software named Crypto Split Technology (CST) to divide received payment for sold item (good or service) into parts, immediately transact the parts and register all transactions to the electronic wallets of the Cryptocurrency recipients on Highly Scalable Blockchain Network (HSBN) for Taxation purposes without bank facilities. Each part is calculated as a percentage of the payment received for the item for sale with finance in accordance with recommendation of Service Providers and business regulations. We used Smart Contracts (SC), Blockchain Technology (BT) to digitalize the sale conditions and automatically split cryptocurrency into parts depending on which web page (Service Provider or Affiliate Marketing recipient of Cryptocurrency) the sale was initiated from. CST allows searching of Cryptocurrency recipients on HSBN and retrieving their summarized financial reports with digital guarantee for legality transparency and logistics of business operations and proposed method of collecting Tax finance and CryptoTax for national authorities. Diagram 1. Business setup of proposed New Financial System and Method to collect tax finance Highly Scalable Blockchain Nllletwork CST Blockchain Taxation Agency Crypto Tax Agency Client Identifier Software IN' / I' STMaiger Cther Recipients of Consultant Service Provider Cyto-Currency E-Commerce Platform I t ' maintenance 1%(1) 1 0(2)$O 0 $0 CSTDomaina E-Commerce Platformi Transactions Auditable Financial Report cST Blockchain identical for each recpient ConsultantWebpage IE-Commerce Platform with I I interface for CST Crypto Split Technology (CST) ondtion of Se 1. Smart contract Forming Itemfor ale2. CST Blockchain Forming 1%($0) Finance provided by Buyer AT 3. Split Finance 10%, 20%, 70% ptocurrency via E-Commerce Platform GUID Based 4. Immediate Transactions Transfer Payment/ Electronic Wallet CSTManager Service Provider/Webpage Electronic Wallets of Registered Users Service Provider Consultants Other recipients of Crypto-currency Instructions to split finance -10% and pay recipients immediate *20 A Distributed Database of Highly Scalable Blockchain Network

Description

Integration of Cryptocurrency Splitting Technology, Highly Scalable Blockchain Network and Mirror Advertising Technology for transparency of Business Operations and Taxation

Background of Invention

The present invention relates generally to solving some of the issues of monetary system and registration of the financial transactions in Cryptocurrency without traditional bank facilities for transparency logistics and legality of business operations. In addition, the invention relates to, among other things, introducing for national authorities a method to collect Tax and Crypto Tax from each sale completed with transactions of finance to Cryptocurrency Recipients.

The bank and governmental authorities face a number of challenges in their attempts to stabilize current financial system and improve taxation.

The world financial system is not that stable. There is also a concern related to the “critical mass” of Cryptocurrency and uncertainty as to how Cryptocurrency should be dealt with in the future. Solutions to prevent the risk of new financial crises should be considered by the authorities, taking into consideration the risks of uncontrollable changes of financial streams with shifting financial interests of the authorities and social groups aiming to control the world resources of finance and power. In this aspect the interests of the banks and governmental authorities may not always match each other.

We have developed Software named Crypto Split Technology (CST) to divide received payment for sold item (good or service) into parts, immediately transact the parts and register all transactions to the electronic wallets of the Cryptocurrency recipients and store the information related transactions, details of sale and Cryptocurrency recipients in CST blockchain. Each part is calculated as a percentage of the payment received for the item for sale with finance in accordance with recommendation of Service Providers and business regulations.

We considered how to store a CST blockchain on HSBN and integrated the CST with Mirror Advertised Technology (MAT) described in Australian Patent AU2009101260 (2009) for online searching purposes. MAT is designed to manage Affiliate Marketing and control advertising revenue. That approach opened for us an opportunity to register and store the details related Cryptocurrency transactions and recipients on Highly Scalable Blockchain

Network (HSBN), nominate the national institutions (CryptoTax Agency and Tax Agency) to receive finance from each sale completed on CST domains and use summarized financial reports related business activity of Cryptocurrency recipients for Taxation purposes.

The integration of invented CST with MAT on HSBN is shown on Diagram 1. Business setup for proposed new financial system and taxation.

In this aspect we considered statements of digital guarantee solutions noted on websites such as IBM (Australia), ASBAS Digital Solutions (Australia) and European Digital Guarantee of European Parliament Policy Department.

We offer the method to digitalize the instructions of Service Providers for computers with assistance of SCT and split the finance received as a payment automatically in registered parts related to each sale. As the result of our work we became able to modify E-Commerce Platform working with MAT and introduce proposed method to collect Tax related finance and Crypto Tax as parts to build a new financial system with digital guarantee of transactions and calculations related to taxation.

Considering prospects to use CST to support business operations with Cryptocurrency we were aiming to: a) Find business logic for integration of invented CST with available BT and SC to register financial transactions with a digital guarantee of the transaction registration and storing for taxation purposes all transactions for each sale including participants of Affiliate Marketing. b) Solve the issues of registering the store and search information related to completed sales including Affiliate Marketing in distributed databases with opportunities to retrieve c) Offer people a paperless way to register their business operations, pay tax and receive tax returns on the base of processing of summarized financial reports for each cryptocurrency recipient and transactions for transparency of business operations and taxation purposes. d) Introduce a technical solution for the Governmental authorities to control legalization of Cryptocurrency transactions if requested with the use of invented Cryptocurrency Splitting Technology to collect Cryptocurrency Tax (“CryptoTax”) related to each payment received by Cryptocurrency recipients.

Our vision of the prospects of using the Highly Scalable Blockchain Network and Smart Contracts is based on special algorithms of online advertising with the recording of conditions of sale (Australian patent AU2008100990) (2008) and other related concepts (AU2008101052, AU2007100869) (2007) to manage databases with remote possibilities of using a decentralized model.

Considering current IT achievements described at www.ibm.com,www.bitcoin.core and www.icobench.com we have noticed the prognoses related to the future of the Distributed Ledger Technology (DLT), commonly referred to as “blockchain” or Blockchain Technology (BT).

We took the liberty to present here the highlighted text from the websites almost without changes in order to not alternate the meanings and terminology of the technologies. The statement made by IT Consultants on IBM website; “What the internet did for communications, blockchain will do for trusted transactions” is more than promising.

Considering the opinion above and in a view of the content of Australian Patent AU2009101260 (2009) for Mirror Advertising Technology (MAT) that simplifies recording and transfer the conditions of sale we would add: “...And if that is done with appropriate technical solutions, an E-Commerce Platform will be able to manage payments with Cryptocurrency with transparency requested for online audit and with opportunities not to use traditional bank facilities and with the chance to simplify business regulations and tax system”.

We predict there will be a need for technical solutions to solve the issue of traceability of transactions in Cryptocurrency and improve the transparency of business operations with Cryptocurrency.

The key point to solve the issues is the need to digitalize the instructions of service providers made during advertising to create the Smart Contracts which are to assist the computer to transact as soon as the payment for the advertised item for sale is provided on the selected the E-Commerce platform. Before the transactions process (including tax payments) in accordance with the Service Provider instructions, the computer has to know where to send and how much. We solved this point using MAT that assists to identify the webpage from where the sale was initiated and the content of the advertised offer for the particular Smart Contract.

Another point is to know all Cryptocurrency recipients for each sale completed on selected E Commerce Platform including recipients of Affiliate Marketing. For audit purposes and logistics we managed to register the details of the sold item associated with the web page of the user registered on the platform (by Reference Number of the Item for sale or GUID) and the details of the transactions in one block of information. For that we used Mirror Advertising Technology (MAT) working with GUID and Cryptocurrency Split Technology (CST). This block of information we managed to store in the blockchain from where the E-Commerce Platform software is able to form summarized financial reports with information kept in the distributed database.

We believe that if those solutions meet the definition of a “digital guarantee” during registration of Cryptocurrency transactions, then with the management of databases storing transactional data for taxation purposes we will be able to modify the financial system and bypass bank facilities.

The calculation of tax and tax return for Cryptocurrency users may be done without “human intervention” based on technologies available now.

How to pay and receive Cryptocurrency using electronic wallets is well described on www.bitcoin.core. The website refers to the traceability security and privacy policy of paying by Bitcoin.

In this example we can show some of the advantages and disadvantages of current cryptocurrency usage. A cryptocurrency wallet does not disclose information about the Client or Service Provider to peers on the network when receiving or sending a payment. This wallet of www.bitcoin.core lets Clients setup and use Tor as a proxy to prevent attackers or Internet service providers from associating payments with an IP address. The issues related to the prospects of using Cryptocurrency and Blockchain Technology is highlighted on www.icobench.com .

The person receiving local currency after conversion is to pick up the payment with some actions that may be traceable. What was paid for with the Cryptocurrency is not always possible to know. The address of the wallet may be changed and next time the payment may be received from another electronic wallet.

If users wish to pay with Bitcoin, many service providers can convert the payment to local currency using available bank facilities. Websites such as www.tokia.io or www.coinspot.com.au are examples.

As shown at www.bitcoin.core instead, they used a confirmation score that indicates how hard it is to reverse them. Each confirmation takes between a few seconds and 90 minutes, with 10 minutes being the average. If the transaction pays too low a fee or is otherwise atypical, getting the first confirmation can take much longer.

We understand that Bitcoin is an experimental new currency that is in active development. Bitcoin payments (transactions) are irreversible; they can only be refunded by the person receiving the funds. This issue may be resolved if information related to transactions is kept along with the details of sale. There are a number of advantages to use BT for registration of Cryptocurrency transactions.

We have considered available technical solutions to support operations with Cryptocurrency and improve transparency of trade and logistics. We paid attention to the concepts how national authorities would be able to receive the finance named Tax as a part of the transactions.

We considered how that may be done without assistance of traditional bank facilities and with digital guarantee of registration transactions on distributed databases if the issues related to tax collection and transparency of the operations are solved.

We concluded that one of the best ways to build a new financial system based on paperless registration of the transactions and collecting tax by the authorities would be a solution to collect the finance (Tax and Crypto Tax) as a part of divided payment received for each sold item.

Our proposed business set up offers an opportunity to trace a person or institution who received a sold item based on logistics and the delivery of the item organized by Service Providers.

Currently we are able to pay cash for requested services and goods anonymously or not, and Service Providers may receive cash but not register that cash and not pay tax. The entire process is the reason for tax system failure with the need for authorities to increase tax.

The offered Software I Platform eliminate the risks of not receiving tax. Eventually for working people, the process may be associated with less tax to pay along with fewer payments to accountants, banks and other “supporters” of traditional monetary system.

We refer to the conclusions of IBM scientists who proved that the Legal framework is being changed with the replacement of physical solutions with digital when the “digital guarantee” in relation to previously used paperwork will be enough for the court to make judgments. Prior to the Commonwealth Electronic Transactions Act 1999, a key determinant of a binding contract was the inclusion of a physical signature by each party. In recognition of the increasing use of electronic forms of communication, the 1999 Act — which is generally mirrored by each State — clarifies the role of digital signatures, and electronic communications more broadly, confirming their validity as a means of executing a contract.

Nowadays, more and more exploratory solutions appear using Distributed Ledger Technology (DLT), commonly referred to as “blockchain”. One of the main applications of the technology is blockchain-based currencies and smart contracts. The issues related to the prospects of using Cryptocurrency and Blockchain Technology are well discussed at www.icobench.com .

The process to change the Taxation system may be endless (at least for our lifetime) as proposed technical solutions assist with bypassing traditional bank facilities or using alternative systems to support business regulations, even if the process is supported by governments. In a number of countries, the bank system and its stability may work against digital solutions due to reasons not discussed here.

We analyzed the following platforms to learn about their suitability to transfer information between registered users and the security systems the networks may offer for taxation purposes: • BigChainDB is a Big data distributed database with blockchain characteristics. It can handle one million writes per second for transactions with capacity of petabytes of data and sub second latency. • ChainCore is platform for issuing and transferring financial assets. The operation is governed by a federation which is a designated set of entities. The assets are securities, derivatives, currencies (native digital assets). • Corda is a Distributed ledger platform with pluggable consensus (the only platform available) with no global broadcasting. It has a query language similar to SQL. • Domus Tower Blockchain is designed for regulated environments, e.g. securities trading, where participants know each other. The data transmitted to the blockchain is digitally signed and verified before it is written to a block. • Etherium is a decentralized platform that runs smart contracts on a custom built blockchain. Etherium wallets facilitate holding crypto assets as well as writing, deploying and using smart contracts. The platform can create crypto currencies and enables creation of democratic autonomous organizations. • Hyperledger fabric is able to support one or more networks, each managing different assets, allow recording Agreements between users, work with query and update ledger using key-based lookups, can use range queries and composite key queries. It can use read only history queries. Transactions contains signature of every endorsing peer. Peers are able to validate transactions against endorsements policies. Channel’s ledger contains a configuration block defining policies. • Quorum is for registered users and government I national authorities and is an open source distributed ledger and smart contract platform based on Etherium. The platform is suitable for applications requiring high speed and high throughput processing of private transactions. • Stellar is an open source distributed infrastructure that connects banks, payments systems, and people. The platforms enables the building of mobile wallets, banking tools, smart devices and provides RESTfull HTTP API server Horizon working with Consensus protocol. • Catlair Platform is considered as an E-Commerce Platform to enhance affiliate marketing.

The Catlair Platform is a platform using the technology for online advertising named Mirror Advertising Technology (MAT), which is able to control the flow of advertising revenues. The platform allows an original offer advertised on the web page of a Service Provider to be transferred to the pages of other website users and be registered there under a unique Reference Number. The platform assists with searching online by the name of the business offer or by its digital reference which for example may be Reference Number associated with GUID. It assists to know which webpage the sale was initiated from. The concept of MAT is described in Australian Patent 2009101260. That time, the ideas to keep data in distributed databases were solved without BT but with remote possibilities of using a decentralized model.

We managed to use the concept not to simplify payments to participants of Affiliate Marketing, but to know who received finance, when and what for. The platform allows Service Providers to include commissions for advertising as a percentage of the offer price set up during advertising of the offer. The commissions are payable if the registered offer proceeds to a sale through the use of MAT and the reflection of the offer on a Consultant’s web page where it acquired its unique reference number. The invented software bills Service Providers according to agreed percentage rates and pays the Consultant who brought about the sale, through the use of the reflected advertising. Commissions are paid via the accounts of the administrating body controlling the website. The administrating body retains an agreed percentage for itself before transferring balances to the accounts of the Consultant. Before payment of commissions to Consultants from a related Service Provider a human element enters. The Service Provider should transact the payment. There is no immediate transfer of the amount of payment calculated by the computer. The platform that time did not meet the criteria of a Digital Guarantee of registration of the transactions. We considered how the proposed business set up may be digitalized and improved.

Integration of our developed CST with previously described GUID based MAT in our business set up is based on communications and interactions between Business to Business (B2B) and Business to Customer (B2C) and offered a business structure to enable governmental Taxation Agency to use tools to allow full visibility over transactions in Cryptocurrency.

We considered relationship with banks that support the current financial system.

The banks may not like the ideas of using payments without traditional bank facilities to transact and may be keen to use so called “bridging technologies” to combine payments in Cryptocurrency with the new technologies to support the current bank system.

We predict development of a digital economy when “bridging technologies” aiming to control transactions in Cryptocurrency will conflict with technologies based on blockchain networks. We believe that transactions on networks with Cryptocurrency capabilities may coexist with the current bank system or even replace it if the legal and regulatory framework of Cryptocurrency usage is supported by national regulation.

It is an inevitable process to replace the tools of the “physical guarantee” and use instead all advantages of “digital guarantee” for traceability of financial operations, with Cryptocurrency and transparency of commercial operations and logistics.

How to receive the Cryptocurrency and to pay tax from operations with direct transactions between electronic wallets is a “grey area” especially for those who already have significant volume of Cryptocurrency, some of them may welcome regulatory and legal changes. That is why the developed software will support traceability of transactions in Cryptocurrency and may be improved and polished without enthusiasm of the bankers.

The key advantage we are able to offer our community is the chance to combine the developed “plug-in” software for traceability of transactions in Cryptocurrency (blockchain technology) and related Smart Contracts with available commercial platforms.

There are a number of websites and places in Australia where an Internet User (customer) already is able to open an account to buy Bitcoin, Ethereum and more with instant delivery and easy verifications with ability to buy anywhere, on any device, anytime.

One of the websites to buy Cryptocurrency is www.coinspot.com.au where the tools are available to use a deposit account and transfer a user’s national currency to be able to purchase available Cryptocurrency and register an electronic wallet for each chosen Cryptocurrency. TOKIA debit card may serve the purposes and this is one of the best and easiest ways available for purchasing. The information is available from www.tokia.io.

Both technologies described above may be combined with our developed platform and proposed business set up.

Indeed, TOKIA is bridging the gap between Cryptocurrency and traditional bank facilities. TOKIA provides fast and reliable currency exchange, secure integrated multi-currency blockchain wallet and debit cards to spend cryptocurrency on the go.

Integration of Crypto Split Technology (CST) with GUID Based MAT and Client Identifier Software

Our proposed business setup reflecting the method of collecting and registration of tax finance is based on integration of three modules of software synergizing each other.

The business setup is illustrated on Diagram 1. Business setup of proposed new financial system and taxation.

Those three modules of software are: 1. Invented Crypto Split Technology (CST) based on Smart Contract and Blockchain technology to manage transactions and store information related to business operations. CST is used to split payment in Cryptocurrency into parts, immediately transact the parts to electronic wallets of Cryptocurrency recipients with assistance of Smart Contracts that digitalize the instructions of Service Providers, form a blockchain with details of each sale’s transactions and references (GUID) to identify on a highly scalable blockchain network the webpage from where the sale was facilitated and the cryptocurrency recipients for audit purposes and logistics.

The CST works in accordance with instructions of Service Providers, national authorities (Taxation Agency, Crypto Tax Agency, Agency to maintain Blockchain network) and is responsible to form a blockchain with information to build a financial report for the sale completed. These blockchain are kept in highly scalable Blockchain Networks in distributed databases and are used by the E-Commerce Platform to build auditable online summarized financial reports reflecting the business activity of the Cryptocurrency recipients for taxation. 2. GUID based Mirror Advertising Technology (MAT) and Web Based Referral System (WBRS)

This software is able to work on selected E-Commerce platform and register in a special way the advertised content with the sale conditions transferable from a page of a Service Provider to web pages of the Consultants to engage a particular Smart Contract for CST and transact Cryptocurrency in accordance with the sale conditions specified by the Service Provider.

The software selects the Smart Contract for CST depending on what page (Service Provider or Consultant) the sale was facilitated from and that supports Affiliate Marketing and transactions without involvement of human factor. The module is thought to attract Internet users and developers experienced in social networks to transfer information between pages.

For the convenience of demonstration the module of the software for the proposed business set up is integrated to Catlair E-commerce Platform. 3. Client Identifier Software (Catlair Platform) to operate on Highly scalable Blockchain Network

This software as a module of Catlair Platform is built without open code for the public and is used to locate cryptocurrency recipients associated with web pages of registered on the platform users to process of information stored in the CST blockchain related to each sale assisted by CST. The software is designed to work on CST domain and use CST Manager to form summarized financial reports related business activity of the recipient and is able to process information from different CST blockchain to build the financial reports for audit purposes.

The example list of queries the software is able to run is: a) Revenue Report detailing actual transactions paid by a Service Provider to other registered users of the Platform for completed sales in Cryptocurrency for any nominated period of time b) Revenue Report detailing offers progressing to completion of sales c) Expected Revenue Report detailing anticipated revenue for any nominated period d) Expected Revenue from Providers Report detailing possible revenues flowing from particular Service Provider through the use of Mirror Advertising Technology.

Each module has its own business logic and is able to work independently as plug-in software to represent the proposed concept of financial and taxation systems functioning without traditional bank facilities.

Description of CST and MAT technical solutions to support operations with Cryptocurrency

We are proposing the concept and technical solutions of paying taxes or other conditional payments BEFORE a payment reaches its destination. In that way, a government agency like ATO could collect taxes during payment itself or establish different conditions on payments within a jurisdiction or a country. If a transaction has to be cancelled, we introduced a transition account which is operated inside our smart contract.

In our proposal, we have used the previously developed and patented E-Commerce platform (Catlair) to develop our concept. Our solution has an interface which allows any ECommerce platform to be integrated seamlessly.

We invented Software named Crypto Split Technology (CST) and integrated it to the Catlair E- Commerce platform. As the platform is designed to enhance the efficiency of affiliate marketing using Mirror Advertising Technology (MAT) the invented software is designed to pay participants of sale as soon as the payment (Cryptocurrency or national currency) is received. The functioning of the software resulted in the ability of the platform to digitalize the conditions of sale, nominated by a Service Provider.

The Cryptocurrency received for the sold item is divided into parts in accordance with the instructions of the Service Provider. These parts may differ and depend on from what web page (the web page of Service Provider or Consultant) the sale is initiated. MAT differentiates between Cryptocurrency recipients including recipients of Affiliate Marketing (commissions to pay) and offers the information for processing by a Smart Contract. The received Cryptocurrency is split and each part is sent to the nominated recipient immediately with a digital guarantee (without the involvement of human factor) of registration of transaction. That key point of our technical solution is associated with the forming of a blockchain for each recipient of the Cryptocurrency with identical information recorded related to the details of sale.

This information is to be sent to each of the recipients of Cryptocurrency including the Tax Agency and Crypto Tax Agency to register sale.

In our proposal, we have used the E-Commerce platform (Catlair), previously developed and patented in Australia to develop our concept.

The proposed concept is shown on Diagram 2 Transparent transactions in Digital Economy.

As shown in Diagram 2, one customer (a buyer) may purchase an advertised good from the web page of a Service Provider (1a). Another customer (another buyer) may proceed with purchasing of the same item for sale using the web page of his/her Consultant (1b). The price for the Item is the same as on the web page of the Service Provider and the web page of related Consultants. Either customer will pay the same amount to receive the item. The financial obligations of a Service Provider may depend on how the service Provider advertised the item for sale on their own page.

If the Service Provider needs the sale to be facilitated (assisted) by the Consultants, the instructions to pay a percentage from the price of the Item for sale (commissions for a related Consultant) will be written with assistance of the specially designed interface and considered by the computer as an order to calculate the received payment from sale and immediately transfer the payment to a nominated Cryptocurrency recipient.

As shown in Diagram 2, the recipients of Cryptocurrency apart from Consultant and Service Provider are the Taxation Agency, Crypto Tax Agency, and the Agency responsible for supporting the Platform functioning. The functionality of the agencies is to be specified by national business regulations and described in Terms and Conditions.

This business set up may be modified in accordance with national regulations and may be noted by any investor to explore the details of the invented software or by any developer of E-Commerce Platform available on the market with ability to integrate with our invented software.

We have researched many blockchain related frameworks and choose the two to look at and base our proposal on: Etherium which is ‘The ultimate Smart Contract and Decentralized application platform’ (with Solidity) and Hyper Ledger Fabric at a general level and down to implementation level we based I built our solution using Etherium I Solidity as a Web based application using React JS library as a front-end layer. The purpose of using Etherium (from the Whitepaper 2013) is to have: • programmatic control over transactions • enabling creation of ‘decentralized autonomous corporations’ • using ‘Smart Contracts’ as an entity that can send and receive currency beyond just people

The Etherium network is used to transfer money and store data, and consists of nodes each of which has a full copy of the blockchain or database that stores every transaction that has occurred in the blockchain.

In order to connect to the Etherium network we used: • ‘web3.js’ for developers • ‘Metamask’ for users of the network (which is a plugin for Internet browser) - e.g. setup accounts, initiate a transaction, choose Etherium network (local, test, prod), etc.

We used public and private keys along with addresses to access the Etherium network via Metamask.

The chosen technical architecture for cryptocurrency processing is presented below (it expands on the context diagram presented earlier as a ‘Smart Contract (Process payments)’ component). The component connects to Catlair or other E-Commerce platform via (5d) for processing (receiving, sending and splitting) cryptocurrencies (Ethers).

This is illustrated on Diagram 3. Smart Contract payments component.

When the Web application is loading, it gets static elements from our Web Server (5a), and then interacts with a user and stores and processes transactions and payments on the blockchain (5b). When a transaction is successful, the Web application calls our second component which is a back-end component (written using ASP.NET) and is used to integrate our solution with other E-Commerce platforms.

Similar architecture is used for online audit reports for ATO or another government agency as presented below. The ATO logs onto the Web application periodically (once a reporting period) to (1) transfer cryptocurrency from the transition account to the ATO account and (2) to create required reports.

This is illustrated on Diagram 4. Online Audit Reports A government agency should set-up service providers and consultants via our Web application before they (providers and consultants) can operate on the blockchain (The process is similar to setting up a new ABN/CAN).

Smart contract process payments component

The component is built using solidity as a Web based application using React JS library as a front-end layer. The component interacts with Etherium blockchain network using Web3.

Each transaction, in Etherium, contains the below data: • Nonce - how many times the sender has sent a transaction • To - address of the account the money is being sent to • Value - amount of Ether which is being sent to the target address • gasPrice - Amount of Ether the sender is willing to pay per unit gas for the transaction to be processed • startGas I gaslimit - units of gas, the transactions can take (how much work will be executed with the code or the privilege to run a contract’s function) • v/ r/ s - cryptographic pieces to generate addresses

The main block in the component has been built using smart contract concept which in the Etherium world is an account controlled by code (instead of people in the conventional finance world).

Each contract in Etherium world account has • balance - amount of Ether • storage - data storage (contract’s data) • code - Contract’s code

We have created a contract account in the Test Etherium Network (in browser network I inbox instance) where we have deployed the contract to process payments (from Remix Editor).

We have used the Solidity program language which is strongly typed and similar to JavaScript language to develop our contract.

After creating the contract we used solidity compiler to produce: • byte code which we deployed to the network • application binary interface (ABI) to be used as API to communicate with the contract

We wrote our contract for Solidity version 0.4.17.

We have created the below data structures for our contract to function.

This is illustrated on Diagram 5. Data structure for our contract to function

The variables (that exist during the life of the contract) and functions (methods) we used in the contract are summarized below in two tables.

Table 1

Data types supported by Solidity are (major) boolean, integer, uint, address, fixed array, dynamic array, string, struct, mapping.

Table 2

Function types supported by Solidity are public (anybody might call a public function; the function is not allowed to return any values), private, view (a function returns data but doesn’t modify the contract’s data; it doesn’t involve any payments - it’s free for a caller of the function), constant, pure (does not modify or read the data), payable (someone can send cryptocurrency along with the call, e.g. to pay for the privilege to run the contract’s code).

When a function is called on the contract and when the function modifies any contract’s data, a transaction has to be submitted (or might be called ‘sending transaction to a function’). After a transaction is submitted, the proof of work algorithm will take 15-30 seconds to

validate the transaction before the data gets stored on the blockchain. The transaction will return its hash (values are not allowed to be returned). The transaction will cost money which is covered by a party running a transaction.

The stack of technologies used in our solution is modern and flexible which allows future enhancements and integration to be readily achievable.

Highly Scalable Blockchain Network

We are proposing to use a different approach to blockchain operations as existing solutions are vulnerable to scalability problems. Bitcoin and Etherium blockchain networks are approaching their storage limit.

We have developed a combined approach using advantages from both central and decentralized structures which is a hybrid approach. The main idea is that the Network dynamically calculates a specific value N, which is dependent on (1) the processing power of the Network nodes, (2) network speed and (3) the number of nodes. Based on the N, the blockchain network calculates the maximum blockchain database size. Once the maximum is reached, the highly scalable blockchain network creates two new layers or new blockchain networks which are linked to the first one. The first of the created networks takes a ‘DOMAIN’ or ‘CONTROLLER’ responsibility, the second created blockchain serves the same purpose as the one existed before the two layers were created and new transactions will be stored in the second blockchain network. The ‘CONTROLLER’ blockchain network replicates itself to several nodes using random algorithm providing redundancy and failover capabilities. It uses a hash algorithm (key value pairs) to locate a blockchain network where actual transactions are stored or should be stored.

In such a configuration each node is configured to store the desired size of the highly scalable blockchain network. If a node requests some data about transactions, as a first step the node will use its own copy of the highly scalable blockchain database. If the requested data is not available, the request is sent to the ‘CONTROLLER’ network to copy requested data and the process will start in priority order.

The main advantage is that our approach is highly scalable and adaptive (based on current parameters which are changing and the network monitors them and adapt accordingly) and could cover a country or the whole world.

Appendix A. Traceability of Cryptocurrency Transactions and

Transparency of commercial operations

Crypto Split Technology (CST) digitalizes the conditions of each sale specified by service providers during the advertising of sale offers on an E-Commerce platform. It transfers the finance to recipients, registers in blockchain information related to sale and adds to the blockchain a GUID for searching cryptocurrency recipients for each sale completed in the distributed database.

The proposed software is capable to transact finance and register all transactions to the electronic wallets of the Cryptocurrency recipients such as the Service Provider, Consultants (recipients of Affiliate Marketing), Agencies (National Taxation Office, Crypto Tax Agency and other authorized institutions) without the involvement of a human factor.

The records of sale conditions made by Service Providers with MAT assistance are transferable to the pages of other Internet users (Consultants). We used Smart Contracts to digitalize the sale conditions and automatically split cryptocurrency into parts depending on which webpage (Service Provider or Consultant) the sale was initiated from. Each part is calculated as a percentage of the payment received for the item for sale (good or service) with finance to be instantly transacted to a person or institution (agency) in accordance with the instructions of the Service Provider. The E-Commerce platform users (Consultants) who assisted the sales using our software for affiliate marketing receive service fees or commissions in accordance with business regulations. As the sale is initiated from either the web page of the Service Provider or a related Consultant, the engaged Smart Contract for Cryptocurrency split depends on the sale conditions associated with the GUID (Reference Number) which is distributed to where the Item was for sale. The integration of CST with MAT assists to include the GUID into the blockchain where details of the Cryptocurrency transactions are recorded. The online search by GUID/Reference Number of the sold item assists to locate the web page from where the Internet sale was initiated with the ability to get access to summarized financial sale reports of the related cryptocurrency recipient.

Use of CST on a scalable blockchain network with GUID based MAT plus the E- commerce platform for Internet advertising allows related financial reports to be built for Cryptocurrency recipients and is the base for regulatory framework changes for the use of Cryptocurrency in parallel or replacing the traditional bank system.

To simplify the understanding of the features that the developed software offers for users, we illustrated the Platform functionality in pictures.

Appendix B. An Example of the working Platform with illustration of digital economy in pictures

From a variety of e-Commerce Platforms to share the benefits and profit from online sale between sale participants we have chosen and modified the Catlair platform for Mirror Advertising Technology (MAT) described in 2009 in Australian Patent AU2009101260.

This platform initially assisted only a transfer of text and graphic content of the offers for sale and conditions of sale between web pages. Any registered user could transfer to their webpage the offer for sale published on a web page of a selected Service Provider. The platform however had specially designed Web Bases Referral System (search by Reference Number of advertised offer, name of the Service Provider and Consultant, name of the requested Item for sale and conditions of sale) and we combined the modules of the platform with the software to monitor the progress of the sale with online financial reports to know how much payment was received. The reports became available after completion of sale and transactions made by the Service Provider to the registered users (Consultants) who facilitated the sale from their web pages.

This is illustrated on Diagram 6. Relationship between Service Providers, Consultant and Buyers.

We integrated Split Payment Smart Contract software to the Catlair E-Commerce Platform that was already able to form different streams of information for smart contracts from the webpage of the Service Provider or web page of related Consultants. As the result the platform received new features, related to immediate registered transactions of payment (Cryptocurrency) to the recipients of the payments in accordance with the instruction of Service Providers.

The Consultant was able to receive commissions in national currency or Cryptocurrency from sales registered on the web pages of other Service Providers for those sales that were completed with MAT. The design of the web page of Service Provider is shown on the

Picture 1. A web page of a Service Provider

As shown on the right side of the Picture 1, each item for sale has a Reference Number and the price shown below the icon. If the Icon is green, the transfer of the offer to the pages of Consultants is available, but no commissions are paid to the Consultants even if the sale completed from the page of the Consultant. The orange icons represent the offers that may be transferred to the pages of the Consultant to be sold and in that case the Consultant will be entitled to receive a part of the price of the sold item nominated by the Service Provider as a percentage of the price of the sold item. Grey colored Icons may be reserved to disallow the transfer of the offer to the web pages of other users of the platform.

Please note the business offer of the Service Provider named “Product X” by price 6,000,000 in national currency and with Reference Number 594 was published with written conditions for a prospective Smart Contract but the Reference Number is given in relation to GUID. The offer may be transferred by a Consultant to be registered there under a new Ref. Number (another GOID). The GUIDs (Ref. Numbers) are able to assist with the search within the E-Commerce Platform. Being included to the blockchain the GUID assists with the search of related pages of the Service Provider to locate where the sale was completed. A fragment of a web page of a Consultant is shown on the Picture 2. A web page of a Consultant. A number of sale offers transferred from the web page of Service Providers is shown on the right side of the web page of a Consultant. If Items with green icons are purchased with references to the page of the Consultant, the Consultant will not be paid. The Consultant knew about that before transferring the item to their own web page. Purchasing of the Items matched with orange icons results in immediate transfer commissions/service fees to the Consultant from the Service Provider. If a Customer of the Consultant would proceed with purchasing of the offer from the web page, the consultant will receive the part of the payment (percentage of the shown price of the sold Item) in accordance to the conditions of sale described by the Service Provider before transferring the business offer to the page of the Consultant.

We refer to the content of Diagram 2. Transparent transactions in Digital Economy - Customer selecting the item for sale from the web page or Service Provider (1a) or Consultant (1b).

The price of the item for sale on the webpages of the Service Providers and the Consultants is the same. The conditions of sale differ and depend on the instructions, made by the Service Provider in relation to the participants of the sale and the recipients of payment from the sale. - Acknowledgement by the system of the conditions of sale and payments in the case where the customer used the web page of Service Provider (2a) or Consultant (2b).

The conditions are written by the Service Provider during the advertising of the Original offer. The price is the same on the Consultant’s web page, but distribution of the payment from the sale depends on the web page used by the customer to purchase the item. If the sale is completed from the webpage of the Consultant who transferred the offer to their own page, the part of the nominated price of the item may be paid to the Consultant. - Selecting content of sale conditions to form the related Smart Contract on the basis of the Service Provider instructions (3) - Using software for the translation of the conditions to digitally written instructions for a computer to prepare the Smart Contract (4).

The Smart contracts will be different for each of the information streams coming from the web pages of the Service Provider and Consultant. The price for the Item to sell will be the same, but proposed calculations to split the payment will differ depending on the sale conditions specified in the Original offer for sale published on the page of Service Provider. The Consultant will receive a part of the sold price. This part depends on the percentage specified by the Service Provider during advertising of the item for sale. -Executing of the prepared Smart Contract (5) to split the payment received for sold item (national currency or Cryptocurrency) and transaction of the payment to recipients of currency/cryptocurrency.

To transact the parts of the payment (each part is a percentage of the sold item price) the related accounts/electronic wallets are to be included in the Smart Contract. The software forms only one blockchain containing the information about the recipients of the payment and the amount of the payment transferred to each recipient. For that we used a blockchain network or network with cryptocurrency capabilities (Etherium) (5).

This solves the question related traceability of transactions. -A recipient of payment may be the Australian Taxation Office or other Government Agency.

Australian Taxation Office may introduce unconditional payments for any Service Provider. This may be considered as a part (say 10% of the price of the sold item) that may be changed depending on the volume of the transaction. In case of payment in Cryptocurrency, this part may be named as “Cryptocurrency Tax”. This may be introduced after regulatory and legal framework changes of the financial system to proceed without traditional bank facilities. It may be used for tax returns in the future on the basis of processing of the transactions by the ATO. - A recipient of payment apart from the Service Provider may be the Consultant who rendered their own services to the customer who purchased the advertised item from the web page of the Consultant.

The transactions are summarized in auditable online financial reports for traceability of transactions and transparency of commercial operations. -Another recipient of payment (if included in condition of sale as unconditional payment), may be an Australian (or other country) authority to maintain the Platform functioning.

This is a mechanism of receiving payment by countries/owners of this patent. This part may be small and may be introduced as unconditional payment. -Each recipient of payment also receives the blockchain (5) with information needed to form reports related to transactions.

Those reports are auditable online and may be used for traceability of the transactions by the Australian Taxation Office. -Service Providers are able to use the blockchain (5) for the purposes of Logistics (6), (7) to deliver the goods or services to the customer.

The blockchain (5) has identical information for each recipient of the sale conducted on the E-Commerce Platforms. The information recorded in the blockchain is useful for the Logistics of the sold item to simplify the crossing of borders. -The blockchain (5), (8) is unchangeable and is kept in a distributed database. It may be used for online audits and to form reports by any governmental agency to support transparency of business operations and legality of Cryptocurrency transactions. -The proposed Web Based Referral System (WBRS) works on distributed databases to support not only searching online by the name of requested items for sale, but the conditions of sale associated with the Reference Number of each item for sale on the webpages of Service Providers and Consultants to locate and optimize consumption of sources of supply.

The advertising of the Original Offers of sale is done by recording the conditions of sale on the work station of the Service Provider. A special interface is used to record the conditions of sale and the obligations of the Service Provider. This information is for the Smart Contracts which are digitally written orders to split the Cryptocurrency and transacts the parts to specified electronic wallets. The Software assists Service Providers to advertise the Items for sale, sell the items, authorize automatic (instant) or unconditional payments to the accounts or electronic wallets of the payment recipients. The Software assists with the transfer of offers by Consultants to facilitate trades and apply their own services to explain to customers in relation to selected items for sale. The Interfaces for Service Providers and Consultants are shown below. A user of the E Commerce System may login as shown on the Picture 3. Login to the system to advertise online. The internal interfaces assist to work with advertised items.

The Items advertised with commissions as an example are shown on Picture 4. Items advertised with commissions shown in percentage.

The information put in by the Service Provider via the interface is to form Smart Contracts to split the payment paid by the Buyers (customers) in national currency or Cryptocurrency. The split is instant after receiving the system payment.

The Platform automatically registers the sale and produces a Registration Order (as shown on Picture 8). The registration order is an example of how the E-Commerce platform registers the sale. As the price is shown and payment received the Software acts in accordance with the Smart Contracts and instantly transacts the payments to specified accounts or electronic wallets of the nominated Recipients.

The blockchain is being formed with details about who received the payment, how much and what for. The details of the trade are processed by the E-commerce system to form the reports.

An example of a report related to business activity of a Cryptocurrency recipient is illustrated on the Picture 5. Navigation to choose requested report.

The results of calculation of transacted payment and Commissions paid to Consultants are shown on the Picture 6.

The Smart Contracts are engaged and split the payment in accordance with the conditions of the sold Item specified by the Service Providers during advertising. Receipt of the

Cryptocurrency (as a confirmation of sale) with information related to the Reference Number produces a digital order with instructions for the software. The Platform selects what kind of Smart Contract to engage to send nominated parts of the Cryptocurrency to recipients (Taxation office or alone or both Taxation Office and other nominated Consultants) in accordance with conditions selected during advertising.

Transferring payments without sale (just from one electronic wallet to another is associated with the engagement of another Smart Contract with the reference (message) to be sent to Taxation Office to confirm why the transaction took place. The platform registers all transactions in national currency and Cryptocurrency and forms Reports for related users.

Appendix C. An Example of calculations and payments

The conditions for how a Service Provider (a Medical Practitioner) should pay after the service (procedure) was recorded during the advertising of an offer for sale (service/procedure/operation) on the website of the doctor.

The part (which is sixty percent in this example) of the paid money is transferred to the government as Crypto Tax and Tax related finance. Those transactions are sent to a government block chain network as a confirmation of receiving the finance and verification of the legality of other transactions to cryptocurrency recipients (person or institution specified by the Service Provider) that are involved in providing requested service or aftercare.

The nominated percent of received Cryptocurrency is transferred to the specified Cryptocurrency recipients who may be external to the medical practice website or a store. The transaction is sent to the second P2P network for verification and addition of a new block. The information is saved in the first P2P network as an additional transaction.

The remainder (which is forty percent in this example) is transferred to the doctor’s practice. The fact is documented digitally as a transaction in the first block chain network.

The process repeats as new patients I consumers request the medical service I an item.

The Authority (ATO) retains the agreed percentage for itself which may be considered as a Tax related finance usable for a Tax return and a Crypto Tax. If it is possible to keep the CST blockchain on HSBN and retrieve the blockchain for processing by the Client Identifier Software that is linked to the Crypto Tax Identification Number to build the summarized financial reports related to business activities of the Cryptocurrency recipient in distributed databases the proposed business set up to build

The Technology gives the highest degree of transparency of transactions if the records (references) are processed in a manner to best understand their history. In fact we may consider Cryptocurrency as facts that some actions (with references) happened, the Item for sale was sold and if the references were included in block chain, the pre-history of the process of sale (in accordance with included references) may be verified I identified along with using blockchain transparency.

We would save time and space not to refer to prototypes of the Platform.

Appendix E. Integration of E-Commerce Platform (Catlair) with a client database and the Highly Scalable Blockchain Network (HSBN)

The modules of E-commerce Platform are illustrated on Diagram 7. Four Modules of Catlair Platform for integration with distributed databases.

On the Diagram 7 we have illustrated the integration of the Catlair software with “client” databases in four modules: “Alpha” module offers maximum independence for IT infrastructure. “Betta” module is for independent databases on the host of the database user. “Gamma” module is for a personal database on the Catlair server. “Delta” module allows the opportunity to place databases of a variety of users in the Catlair database where each group of users works independently in own network. This mode is to support the Highly Scalable Blockchain Network and is used as an example to illustrate our proposed business set up.

The “Alpha” integration scheme is illustrated on Diagram 8.

This scheme provides the maximum independence for the owner of the data. The base is located on a server “Alpha” zone. The owner is responsible for MSSQL maintenance, support of the database, web server, and all other software. Internet users are able to address to the web server of the database owner.

Advantages of “Alpha” scheme: • The Owner of the database is able to control the server and modify any component of the server and database. • The Owner supervises any activity within the database, including business logic, accounting records of users, personal data and all other information. • The Owner independently defines what inquiries will be redirected in Catlair platform

Corporate databases may use “Alpha” scheme where legal aspects are desirable and place the servers on the territory of the owner. Trading networks, online sales systems, booking online can be an example.

The “Betta” interaction scheme is illustrated on Diagram 9.

The owner places the database on an accessible server. All information including business logic, authorization data settle down in the base. Processing of the user inquiries is assisted by the Catlair web server, which is able to direct the inquiries to a Catlair database.

The “Delta” interaction scheme is illustrated on the Diagram 10. This IT structure is the most suitable for interactions between client databases and may assist with building Highly Scalable Blockchain Network (HSBN).

The data and resources of the database “Delta” are shared with other distributed databases that created by other users with assistance of Catlair software. Thus in each base the selected data of a variety of organizations and physical persons can be used for searching purposes by request of users of other distributed databases. Those requests may be related to the search of information included in CST blockchain. For that we have to use references to locate the needed block of information to engage the Client Identifier Software (see Diagram 1).

Due to the flexible system, each participant of the system has a right to use and develop the safety structure for all elements of the database and create their own site, register new users and use the Catlair frameworks allowed by the owner of the database. “Delta” scheme advantages: • Almost no expenses for the database support. • Fast expansion of the data structure. • Easy start to use the “Delta” database which is designed to support the Highly Scalable Blockchain Network (HSBN). It is necessary to be registered only.

Considering the Business setup for proposed new financial system and taxation we specified the main functions of the HSBN.

The main functions of the HSBS are: -Storing and searching information in CSN blockchain related to transactions and details of sales completed by a Cryptocurrency Recipient (person or institution) in distributed databases. -Transfer the requested blocks of information (in a form of CSN blockchain) for processing by the Client Identifier Software and building related financial reports

The registration of a Cryptocurrency recipient on the HSBN requires changes of legal and regulatory framework to legalize Cryptocurrency. The issue is not solved yet and Crypto Tax Agencies are yet to be placed to “supervise” regional or national transactions. The agencies do not exist yet.

With proposed technical solutions the regional and national authorities are able to exchange CSN blockchain between distributed databases for transparency of operations with cryptocurrency.

To identify a Cryptocurrency recipient registered on HSBN we offer to introduce a digital reference. The CryptoTax Identification Number may be included to the CSN blockchain related to each sale. To know what for the Cryptocurrency has been received other digital references are needed.

We used GUID base MAT for searching purposes. Along with CryptoTax Identification Number given during registration on HSBN a GUID, as a digital reference, may be used by the Client Identifier Software (see the Diagram 1). That assists to retrieve the information from related distributed database and build the summarized financial reports.

Information for the users of “Delta” mode with GUID based MAT. “Delta” module of the Catlair is an ideal approach for the clients wishing to create an interface to write the conditions of sale. The Interfaces of the mode are capable to offer for Smart Contracts of the CST the information written by Service providers in relation to sale conditions.

Crypto Split Technology (CST) is integrated with the Catlair E-Commerce Platform to manage sales online as described above. In addition the software using GUID based technology is to enable searching of Cryptocurrency recipients, storing details of each sale in the distributed database and is able to send the CST blockchain to other Cryptocurrency recipients outside of the distributed database to form a scalable I distributed blockchain network. In the Client database the Catlair software forms the auditable summarized financial reports related to the sales retrievable on the computer of each Cryptocurrency Recipient and logistics of supported business operations.

As the sale is initiated from either the web page of the Service Provider or a related Consultant, the engaged Smart Contract for Cryptocurrency split depends on the sale conditions associated with the GUID (Reference Number) which is distributed to where the Item was for sale. The integration of CST with MAT assists to include the GUID into the blockchain where details of the Cryptocurrency transactions are recorded. The online search by GUID/Reference Number of the sold item assists to locate the web page from where the Internet sale was initiated with the ability to get access to summarized financial sale reports of the related cryptocurrency recipient.

The Software is a domain controller or coordinator of electronic communication between databases in different regions related to Mirror Advertising. We designed the Software as a tool to register the text or graphic content of the offers, their transfer from one controller (database) to another and to remove the Mirror Advertised offers from web pages of Consultants when the Original offer is not online or not available on the website of responsible Service Provider or changed. For a new offer a new GUID is assigned. The software is responsible for generating of orders to the domain databases to create Reference Numbers associated with a particular GUID. Alternatively the numbers may be generated by the Software to be kept in a Pool and sent to a particular controller to form a Reference Number of an Original offer. That design is to exclude a duplication of the Reference Numbers generated in different controllers of the domain.

Apart from digitalizing the conditions of sale for the computer to provide payments with Crypto Split Technology (CST) to the Service Provider, Consultants and agencies (National Taxation Office, Crypto Tax Agency and Agency to support the proposed business set up) the software is able to process the information received from a particular client database.

That is related to functioning of Client Identifier Software which is able to process information stored at Highly Scalable Blockchain Network by request and work with CST blockchain to build auditable financial reports about business activity of a Cryptocurrency recipient.

We have illustrated on Diagram 11. The Business Logic for the Client Identifier Software (shown as an example).

The search of a Cryptocurrency Recipient, the details of associated transactions and logistics of sold Item and building related financial reports for the Cryptocurrency recipient is being conducted using software of the local E-Commerce Platform (Catlair) on the GUID based MAT.

The GUID to search a block of information for transparency of business operations and search availability using Reference Number of the sold Item is shown on Diagram 12.

Another function of the software is to make orders to the databases of the domain to remove Mirror Advertised Offers if the Original offer is not online, has been removed or changed (modified) by the Service Provider. As an example we designed the software to control transmissions of electronic codes to other databases of the domain with the assistance of a Link Server that is a part of the recognized technology of MS SQL.

In fact the application of GUID based MAT has been described in Australian Patent AU2009101260 (2009).

Each controller / database of the domain receives its own identification number (for example GUID_DB) and has its own website working on the invented platform (software) to implement Mirror Advertising Technology.

The original offers are formed in the database. Each offer is registered with an electronic code named GUID-Original (generated by the Software) which, after being modified by the database software is displayed on the website as a Reference Number. Several original offers for sale are registered with an Order Registration Number. The software coordinates generating electronic codes (GUID-Original) for each database of the network and forms a pool of the numbers of GUID-Original within each database.

Mirror Advertised Offers are registered in the database and are shown on the web page of a Consultant. There may be several Mirror Advertised offers (a cluster) related to the GUID-Original of the Original offer. The database has its own Number Generator. Each generated number has an electronic code (marked as ‘MA’). That MA code of the new generated number may be added to the code of GUID-Original. The new code GUID-Original-ΜΑ may be processed by the software, to be recognized by the System as a unique code of a new Mirror Advertised Offer. This GUID-Original-ΜΑ code may be recognized by the System as containing the GUID-Original. The software is designed to be able to search the entire cluster (a group of Mirror Advertised servers I controllers I offers) of the codes originated from GUID-Original and remove each GUID-Original-MA of the cluster.

The actions related to removal or modification of the Original offer due to the features of the Catlair Platform facilitates corresponding changes on the pages of those registered users of the Platform who transferred the offer for sale. New Registration Numbers are given to modified Original offers for sale on the page of Service Providers, and corresponding offers on the pages of the other users who transferred the offers (being Consultants). If the Original Offer is removed by the Service Provider, the Software then releases a command to the software of each database to locate and remove from online advertising ALL Mirror Advertised offers marked with codes GUID-Original-MA. In other words, the Software makes orders to each controller / database in the cluster of databases to remove the codes marked as GUID-Original-MA. As a result all Mirror Advertised Offers with unique Reference Numbers reflecting GUID-Original-MA will disappear from the web pages.

As the software processes the advertised content, it keeps the details related to the advertised content in the offer marked with the code GUID-ORIGINAL or GUID-ORIGINAL-MA. As a next step, offers may be retrieved online by a Reference Number search even if the offers are no longer online.

Each database in the domain is registered with a code GUID-DB. The Catlair software is able to recognize the database in the network where the code for MA was generated. The GUID-DB is added to the each cluster code GUID-ORIGINAL-MA for the software to be able to recognize and search the database where the Mirror Advertised offer has been created. If a particular order had a request to be removed then the Visor is able to send a command to remove it using the reference and electronic code of the offer. As a result, the offers may be removed remotely from any database in the domain without the participation of the owner of the website where the offer was published.

An action to remove the Original offer (code GUID-Original ) within a database of the domain (registered as GUID-DB) acts as an initiator to inform the Catlair Platform about the removal and the Software makes the orders to databases to remove a cluster of Mirror advertised offers associated with the Original Offer (removal of a cluster with code GUID-Original-MA). The entire process is automatic and does not require people to adjust advertising online manually unless requested.

The Software of each database processes and stores advertised content and is able to retrieve online the offers associated with electronic codes GUID-Original-MA and GUID-

Original using searches by reference numbers. Each reference Number in the case includes reference to GUID-DB + GUID-Original + GUID-Original-MA.

Changes of the price or conditions of sale (updating of information related to the Item for sale) lead to registration of the Item under new Registration Number with changes on correspondent web pages of the users who transferred the offer for own clients. If a Service Provider deletes an original offer from their own web page all Mirror Advertised offers on the pages of Consultants are also deleted automatically.

The Software is able to use the created logic (rules) of information distribution and removal of the Mirror Advertised offers.

As the result of the proposed business structure we can; a) digitalize the conditions of each sale, written by a Service Provider during Internet advertising of a business offer and use Crypto Split Technology and use transactions with digital guarantee (without involvement of human factor) and store information related to each sale in a distributed database. b) Store in the database and retrieve online by request, the advertised content using key code of GUID-DB + GUID-Original + GUID-Original-MA even in cases when the advertised content is no longer online. c) Display online Original offers and mirror advertise the offers on web pages of other Internet users of different databases and websites which work on the platform implementing Mirror Advertising technology. d) Remove identical but differently registered advertised content automatically from web pages of the Internet Users of different databases without any actions of the owner of the website.

Each Cryptocurrency recipient including the Taxation office is able to use a retrievable and auditable financial report related to completed sales formed on the base of blockchain unchangeable records kept in a distributed database.

The ability to process summarized reports of Cryptocurrency recipients is the base for regulatory framework changes to use Cryptocurrency in parallel with or to replace the traditional bank system.

Appendix F. Advantages of the proposed business set up and benefits for communities • The payment from a Service Provider to Cryptocurrency recipients is registered with a "digital guarantee" (without the involvement of a human factor) with related to sale approved transactions to be processed immediately after receiving payment from a buyer and that is associated with fewer risks of mistakes and improving logistics. • Retrievable reports related to business activity of Cryptocurrency recipients are auditable online and may be used by the Taxation Office. The offered Software I Platform eliminate the risks of not receiving tax. Eventually for working people, the process may be associated with less tax to pay along with less payment to accountants, banks and other “supporters” of traditional monetary system. • The proposed business set up with using of Crypto Split Technology (CST) integrated with Mirror Advertising Technology (MAT) on Highly Scalable Blockchain Network (HSBN) assists with solving of the issues with legality and transparency operations with Cryptocurrency. • There is a possibility of integration of the Split Payment Smart Contract Software with other E Commerce Platforms on the basis of instructions to communicate. • We offer for national authorities one of the effective tools to collect a part of cryptocurrency transactions. This part we named Crypto Tax. Tax related part of transaction and Crypto Tax may be collected before the cryptocurrency reaches other recipients of Cryptocurrency. Depending on the percentage assigned for the Crypto Tax by the authorities it became possible to build a strategy to support selected cryptocurrency and form a predictable monetary policy for business operations and international trade using Cryptocurrency.

The CST produces a CST blockchain for each completed on E Commerce Platform sale. How to use this CST blockchain depends on legal and regulatory frameworks the national authorities which are to consider supporting Cryptocurrency operations.

It is time to come back to Diagram 1. Business setup of proposed new financial system and taxation.

This business set up is based on our vision to resolve the issues of registration business operation and opportunities for the national authorities to collect Tax and CryptoTax.

The Diagram 1 reflects both what should be done and what we already have in context of the paper.

The Business setup reflects the need for solving the issue of a digital identity for a Cryptocurrency Recipient (a person or an institution). These frameworks may be related to a digital identity of a Cryptocurrency Recipient. There are no standards of IT Architecture and security to offer solutions to build the HSBN. The Business Setup is to collect the Tax.

The reference to digital identity of a Cryptocurrency recipient is required for the software to identify a Cryptocurrency Recipient on the HSBN which is built with “NoSQL” principles but with the need to process information related to MSSQL databases. We offer to name the identity as a CryptoTax Identifier. In Australia, for example, by choice of the authorities the Crypto Tax Identifier may be related to so named Health Identifier (16 digits of reference used for E-Health initiatives and patients records) or references for Health Providers (person or institution), named HPI-I and HPI-0 (each with 16 digits) to refer to E-health and calculate the finance paid by Medicare for rendered services. Other references, such as Medicare Number or references for passports or Insurances with the standards for security and procedures may be chosen by national authorities. The procedures may support selected cryptocurrency on the authorized platforms designed, for example, to cover a particular human being activity, including world web based referral system for health care servicing registered on HSBN health providers.

With the elements of speculations related to changes of the legal and regulatory frameworks in that matter we can only predict the efficiency of CST Manager working on CST Domains to support of a particular distributed database.

The Sockets (Program Interfaces) are to communicate between two or several distributed databases where the requests in relation to the CryptoTax Identifier are being formed. The name of the place to monitor the process is CryptoTax Agency of the blockchain database. Working with CryptoTax Identifier the agency is to address a request to a particular database (in our case- Catlair Platform) with the opportunity for the CST Manager to build the summarized financial reports we described above. CryptoTax Agencies operating regionally or nationally to monitor cryptocurrency transactions are communicate to each other using the Sockets (Program Interfaces) and collecting information from CST domains.

The Client Identifier Software working on selected E Commerce Platform (a distributed database) is able to work with a CryptoTax Identifier which in a way is a GUID related identity. We believe that the reality is real and choosing of the digital identity for a Cryptocurrency Recipient is a priority for national authorities. As mentioned before the priorities of Governmental and Bank authorities may not match each other, so we would not able here to speculate here on what principles the Digital Identity I CryptoTax Identifier is to be formed, and state here that it is needed for Tax Agencies /CryptoTax Agencies interactions if the requests are coming from distant CryptoTax Agency to another that supports a specific CST Domain. The exchange of CST blockchain may assist with the issue.

The business set up is based on described above practical examples how use the invented software.

Diagram 2 Transparent transactions in Digital Economy also reflects what we actually did to enable the selected E-Commerce Platform with GUID based MAT to work with a feature of digital guarantee registration of Cryptocurrency transactions for the participants of Affiliate Marketing. CST is based on SC and BT and enables a new method to collect tax related finance and a part of each transaction as a CryptoTax based on proposed algorithms of Internet advertising and transfer advertised content between web pages of participants of Affiliate Marketing.

We solved the problem to divide received payment for sold item (good or service) into parts, immediately transact the parts and register all transactions to the electronic wallets of the Cryptocurrency recipients without the involvement of a human factor. The recipients of Cryptocurrency such as the Service Provider, Consultants (recipients of Affiliate Marketing), Agencies (National Taxation Office, Crypto Tax Agency and other authorized institutions) are able to use auditable summarized financial reports for taxation purposes online for each completed on an E-Commerce platform sale. CST enables a paperless business set up to allow block of information storage related to each sale on HSBN that is supported by Mirror Advertising Technology (MAT) to facilitate exchange information between web pages and to allow searching of Cryptocurrency recipients and retrieving online their summarized financial reports to assist with legality transparency and logistics of business operations.

Crypto Split Technology (CST) digitalizes the conditions of each sale specified by service providers during the advertising of sale offers on an E-Commerce platform. It transfers the finance to recipients, registers in blockchain information related to sale and adds to the blockchain a GUID for searching cryptocurrency recipients for each sale completed in the distributed database. We used Smart Contracts to digitalize the sale conditions and automatically split cryptocurrency into parts depending on which web page (Service Provider or Consultant) the sale was initiated from. Each part is calculated as a percentage of the payment received for the item for sale with finance to be instantly transacted to a person or institution (agency) in accordance with the instructions of the Service Provider and national business regulations. One part named Crypto Tax (CryptoTax) may be collected by national authorities with digital guarantee of transaction registration before other parts reach nominated Cryptocurrency recipients from each registered on HSBN sale.

Use of CST on HSBN with GUID based MAT allows to introduce a business set up for transparency of business operations with Cryptocurrency, open opportunities for national authorities to collect Tax related finance and Crypto Tax as parts of divided payment in Cryptocurrency for each sold item and legalize using of Cryptocurrency for building a new financial system based on SCT and Blockchain Technology.

Claims (5)

1. We have developed Crypto Split Technology (CST) based on Smart Contracts (SC), Blockchain Technology (BT) designed to divide received payment in Cryptocurrency for sold item (good or service) into parts, immediately transact the parts and register all transactions directly to the electronic wallets of the Cryptocurrency recipients. CST is integrated with Mirror Advertising Technology (MAT) and enables a paperless business set up to store and process a block of information related to each sale on Highly Scalable Blockchain Network (HSBN) and search Cryptocurrency recipients on distributed databases to assist with transparency and logistics of business operations. The recipients of Cryptocurrency such as the Service Provider, Consultants (recipients of Affiliate Marketing), Agencies (National Taxation Office, Crypto Tax Agency and other authorized institutions) are able to receive registered parts of Cryptocurrency processed as a payment for sold Item in accordance with recommendations of Service Providers and use online auditable summarized financial reports related their activities for taxation purposes and logistics.

2. Crypto Split Technology (CST) referred to in Claim 1 offers technology to receive for each Cryptocurrency recipient and Tax related institutions information in CST blockchain with details of transactions and reference (for example, GUID) for searching on HSNB other Cryptocurrency Recipients for completed sale. Immediate split of the received Cryptocurrency into parts is conducted with the assistance of Smart Contracts (digitally written instructions to split received Cryptocurrency in parts for instant and unconditional transactions in accordance with conditions of sale recorded by the Service Provider in blockchain or frame transferable between web pages of users registered on the Platform). Each part of the Cryptocurrency payment is calculated as a percentage of the advertised price of the sold item and nominated by the Service Provider and authorities during online advertising of the original offer for sale.

3. Mirror Advertising Technology (MAT) element of Claim 1 wherein technical solutions with Crypto Split Technology (CST) digitalize the written instructions for sale made by the Service Provider during advertising of the Item for sale (good or service). MAT transfers the instructions along with advertised content on the web pages of participants of Affiliate Marketing (Consultants) by their request. MAT delivers the instructions related to sale conditions for Smart Contracts to split cryptocurrency into parts depending on from which webpage (Service Provider or Consultant) the sale was initiated from. The GUID based MAT offers for CST to include the digital reference (for example, GUID) to a CST blockchain to identify Cryptocurrency recipients for future references. By request this digital reference (GUID) is used by the Client Identifier Software on the HSBN to identify Cryptocurrency recipients and logistic of the sold item. CST, BT and MAT synergize the functional abilities of the E-Commerce to store a block of information for each sale on Highly Scalable Blockchain Network (HSBN) and retrieve the information by request for audit and taxation purposes.

4. A Business Setup of Claim 1 with application of Crypto Split Technology (CST) and MAT supports transparency of business operations for taxation purposes and opens opportunity for national authorities to collect Tax finance and so named Crypto Tax as a part of divided Cryptocurrency received as a payment for sold item. The invented software is able to provide instant tax related transactions including Crypto Tax. The national authorities in this aspect are able to legalize using of Cryptocurrency and build a new financial system based on SCT and HSBN. The Authority (such as Taxation Agency and Crypto Tax Agency) retains the agreed percentage for itself from each transaction or planned transaction of the payment in a specified period of time. Tax related part of transaction and Crypto Tax may be collected before the cryptocurrency reaches other recipients of Cryptocurrency in accordance with business regulations and instructions of Service Providers.

5. The online auditable summarized financial reports of Claim 1 assist with the logistics of sold items with a potential to simplify cross border trade and are suitable to monitor registration of payments in Cryptocurrency depending on sale consitions, legality and transparency of business operations with Cryptocurrency. In proposed business set up the reports are built by Client Identifier Software of the HSBN. As an example the software of selected E-Commerce Platform is able to process a CST blockchain and build the reports with information related to financial transactions, details of sale and logistic of sold item. These reports are retrievable and auditable online and may include: • Revenue Report detailing actual transactions paid by a Service Provider to other registered users of the Platform for completed sales in Cryptocurrency for any nominated period of time. • Revenue Report detailing offers progressing to completion in sales. • Expected Revenue Report detailing anticipated revenue for any nominated period. • Expected Revenue from Providers Report detailing possible revenues flowing from particular Service Providers through use of Mirror Advertising Technology.