Blockchain innovations backed by our patents

Since we decided to create a Blockchain business line, we have focused on creating differential technology that could create a competitive advantage and help us position ourselves in this industry.

Developing decentralized networks, known as Blockchain or DLT (Decentralised Ledger Technology) is characterized by using protocols and base technologies, initially open source, developed by the community and adopted by the different network operators (consortiums and institutions of various kinds) to build networks based on this software.

This model is valid both for the most representative public networks (such as Bitcoin or Ethereum) and for private or consortium networks, many of them based on distributions developed within the Hyperledger project led by the Linux Foundation.

The size of these communities and the resources dedicated to the development of the technology by foundations created specifically for this purpose make it unfeasible to create new particular technologies, new protocols or even the unilateral definition of new standards for smart contracts, those known in the Ethereum community as ERC (Ethereum Request for Comment). However, they do allow us to contribute by releasing some of our components to the community, such as TrustID, the identity management module of our TrustOS product.

Layer 2 networks as the holy grail for scalable blockchain networks

In this context, our position in Telefónica Tech has always been to facilitate the adoption of technology to companies that are going to develop Blockchain projects, guaranteeing the security and reliability of the networks, their capacity and performance. Also, the exhaustive compliance with service levels, quality standards and regulatory requirements regarding information (information privacy, access and control to personal data, etc.).

The industry trend to provide solutions to these challenges, mainly information confidentiality and network scalability or performance, is to bet on a pyramidal architecture based on what have come to be called layer 2 networks or appchains. These secondary networks use the main or level 1 networks (Ethereum or Bitcoin) to periodically leave evidence of their activity as proof of integrity and therefore guarantees of immutability of the level 2 networks.

This evidence are built using advanced cryptographic techniques (e.g. zero-knowledge proofs or ZKP for short) that encapsulate the content of several transactions grouped together to record them in the core networks guaranteeing that the information does not leave the level 2 network in the clear.

These networks can therefore implement certain features both in terms of centralized governance by a single operator and lighter consensus mechanisms than public layer 1 networks, but they rely on these to guarantee the immutability and integrity of the information, since a possible centralized operator of the layer 2 network cannot alter the information without breaking the consistency of the evidence stored in the layer 1 network.

Consequently, level 1 networks play the role of ultimate guarantors of the integrity and consistency of the information stored in the private networks or appchains. Playing this role, these networks, the sanctum sanctorum of decentralization, behave as a single point of dependency of the secondary networks. In such a way that, for example, a degradation in the performance of the main network, as has happened on several occasions as a result of occasional variations in the markets (the ICO rage or the launch of Cryptokitties), would upset the cascading integrity scheme, temporarily suspending the guarantee of the immutability of the secondary network.

Alternatives to level 2 networks: network federation

Faced with this approach, from Telefónica Tech we have opted for a concept more aligned with the philosophy of decentralization inherent in the Blockchain or DLTs networks themselves. The challenge was therefore to create an alternative mechanism of guarantees for the immutability of private networks or less decentralized governance, eliminating the need and dependence on a single Tier 1 network (for the purposes of hierarchical architecture, a centralized resource).

The architecture proposed and recognized as novel by being granted two patents is based on the creation of a federation of networks with the same hierarchy (rather than Tier 1 and Tier 2 networks) that work together independently of each other's particular technologies and architectures to ensure data consistency, broader consensus and greater trust.

Each of the federation's networks is managed by one or more operators, ensuring decentralized governance and thus control over consensus decisions in the federation. On the other hand, each network operates independently, being able to determine not only the most appropriate technology for the use case and the needs of its users, but also its consensus protocols and the rest of the particular characteristics that allow it to optimize its performance or meet the regulatory requirements of the use case.

In this way, our patent METHOD AND SYSTEM FOR ENHANCED PERFORMANCE OF DLT NETWORKS (EP3934160A1, US11943287B2), defines a protocol stack that includes different elements, i.e.:

• A scheme for naming and discovery of each resource in the network federation (identities, applications, networks, blocks, etc.).
• A distributed transport mechanism for the exchange of control data between the different networks of the federation.
• A procedure for the dissemination and storage of network “proofs of history” as a guarantee and validation of the integrity of the connected networks.

This other patent METHOD AND SYSTEM FOR INTER-DLT NETWORKS TRUST ENHANCEMENT (EP3754899, US20200403799A1) proposes an architecture for a self-governed infrastructure that replicates the high level of trust offered by networks with a high number of independent nodes by taking advantage of the nodes of different independent and heterogeneous smaller networks.

The nodes of any of these small networks can under this architecture exploit additional validation and consensus policies in their transactions and smart contracts in collaboration with the nodes of the rest of the networks.

The challenge of achieving an efficient consensus

As we know, Blockchain networks rely on the collaboration of multiple nodes or participants communicating with each other to maintain consensus and validate transactions. Having eliminated the need for Level 1 networks to guarantee the immutability of less decentralized networks, the next challenge is how to design more efficient and cleaner consensus mechanisms that allow minimizing the processing time at the nodes and thus the transactional capacity of the network.

To this end, we leverage the work done in EU-funded research projects applying quantum key distribution (QKD) technologies in decentralized Internet of Things devices to improve with these technologies one of the lightest consensus mechanisms used in Blockchain networks.

This mechanism, Proof-of-elapsed-time, is based on the generation by the nodes of a random number to decide which one has permission to validate the next block.

In our patent METHOD AND SYSTEM FOR DLT NETWORKS CONSENSUS ENHANCEMENT USING QUANTUM COMPUTING MECHANISMS (EP3813295 ,US11637711) this random number is intertwined by quantum technology in the nodes, so that if a different, potentially malicious number were faked to disrupt the consensus, it would be detected on the spot, expelling the malicious node from the consensus.

This implicitly ensures the reliability of the consensus mechanism without any computation, simply by maintaining the entanglement.

From patent to product

Patents, however, remain a conceptual exercise whose value is relative or null if it is not possible to transfer them to a commercial product and to value them as differential components of the product.

In the case of our patent on quantum consensus, the state of the technology does not yet allow its commercial implementation. However, once the patents have been registered and the invention protected, the two patents related to the interconnection of DLT networks have been implemented as part of the components embedded in TrustOS, the solution we have developed and which we market at Telefónica Tech to simplify the adoption of these technologies.

We have also been made available to different research projects funded by the European Union, which recognizes Telefónica Tech as a key innovator in the Innovation Radar of the European Union and the TrustOS product as 'relevant innovation as interconnection and interoperability solutions for distributed registers' (Cross-DLT Solutions).

Both the granting of the patents and the inclusion of Telefónica Tech in the Innovation Radar is a demonstration of our commitment to emerging technologies and our positioning at the forefront of these technologies.

✅ At Telefónica Tech we generate one of every four patents registered each year by Group Telefónica, demonstrating our ability to innovate and address technological challenges.

Imagen: Freepik.