This year, the number of blockchain-related patents and patent applications are expected to surpass 1,200, about quadruple what it was a couple of years ago. Most existing blockchain patents are owned by large financial institutions. For example, Bank of America owns at least 43 live blockchain patents, more than any other person or company.
While it hasn’t yet found “large-scale opportunities” for these patents, Bank of America is buying them up to “be ahead” and “be prepared,” according to Bank of America’s CTO, Catherine Bessant.
Problems Preventing Large-Scale Opportunities
While Blockchain is gaining in popularity, it still has problems that prohibit it from seeing mass-wide adoption and widespread use. Take the recent market crash with Bitcoin, for example, which is slowly gaining traction again. Innovators like crypto-intel platform Pareto CEO, Eric Lamison-White are developing patents to address some of these issues, and financial groups are taking notice.
If patents like Lamison-White’s can remove some of the obstacles to ‘large-scale opportunities,’ they’ll clear the road for more widespread implementation of Blockchain and cryptocurrencies. Here’s a deeper look at the patents, the major players, and their implications.
Lamison-White, the founder of crypto intel platform, told BlockTelegraph he’s developed a system that “removes volatility from owning cryptocurrencies.” Filed in July of 2014 and recently approved, the patented system uses a network of interconnected accounts to hedge against fluctuations.
“The pricing risks to owners are easily mitigated by a variety of hedging techniques that are available in all other asset classes,” he explained. “Hedging with options, futures and swaps allow for stable value or any risk profile that an owner or even a speculator would desire.”
Imagine you and six friends have crypto accounts. Through Lamison-White’s system, you could link your six accounts to a hedge account, which you’ve each funded with a couple hundred dollars. The system reads micro-fluctuations in your crypto accounts, and transfers dollars back and forth from the hedge account to accommodate, thus keeping your crypto accounts steady in real time.
You wouldn’t have to share this with friends, as the network is fully customizable. You could link your own hedge account to one crypto account, or you could own multiple hedge accounts linked to one crypto account. The customization is one of the things that makes the patent attractive.
Furthermore, hedging with crypto is unique compared to trading traditional commodities because crypto assets are infinitely divisible. You don’t have to buy a $4,000 minimum like you would for, say, a futures contract on oil. Even most hedging contracts on stocks are traded in parcels by the hundreds or thousands. But with crypto assets, you can trade in tiny portions, like .01 Bitcoin.
“This means that people with very small amounts can access the hedging protection that had only been available to the wealthiest and investment banks for most of the last millennia,” Lamison-White added. In addition to making things more financially accessible, the system can measure micro-fluctuations in your account, and hedge accordingly. It’s a more finely-tuned machine.
Switching Transparency for Privacy
The transparency of blockchain ledgers is one of its distinctive features, but it can also work against implementation. Imagine, for example, you’re buying a gift for a loved one. You certainly wouldn’t want that information publicly available.
Transparency may not be what companies want for their sales, nor what customers are looking for when it comes to their purchases. Resolving this flaw makes the Blockchain more viable in real world, day to day transactions, and this is not lost on MasterCard. A patent by their director of product management, Jason Lacoss-Arnold, turns blockchain transparency on its head and facilitates private transactions.
By augmenting transparency with privacy, MasterCard could position itself to facilitate blockchain transactions where they weren’t possible (or desirable) before.
Walmart’s Blockchain Patents Highlight Existing Problems That Still Beg Solutions
Wal-Mart recently filed three blockchain patents of its own:
One facilitates residential utility payments using cryptocurrencies on a public ledger.
Another would store a patient’s critical medical information, such as a penicillin allergy, in a ledger accessible during an emergency. It would require the patient to wear a device, which medical professionals could use to access the information, subject to existing HIPAA laws, of course. But, at the end of the day, maybe our HIPAA laws could use some updating and/or modernization.
Wal-Mart’s third patent is for a security system that stores cryptographic keys, allowing the user to control access to real spaces as well as digital ones.
These patents highlight additional problems that blockchain faces:
- Utility companies don’t widely accept cryptocurrencies as payment;
- Medical information is sensitive and may not be suited for storage on a distributed ledger, as existing HIPAA laws are in place for that currently; and
- Cryptographic keys present their own vulnerabilities, as there is no flawless security system on the market
Not to say that Wal-Mart’s patents won’t work; they could be great. But, they remind us of our need to approach this new technology with a collaborative spirit of innovation.
Patented Innovations are Driving Blockchain Toward Widespread Implementation
As long as ground floor innovators like Lamison-White are addressing problems that have hindered the Blockchain’s widespread implementation, institutions like Bank of America and Wal-Mart will continue to look for new ways in which to implement their systems.
Some are calling this an arms race, as companies stockpile patents like they’re going out of style. But the influx of blockchain patents could do great things for individual innovators and major companies alike. It’s this kind of collaborative engineering that will open ‘large-scale opportunities’ for the Blockchain and digital monies, giving them real world applications in real world markets.