In recent months, the headlines about the involvement of major financial and IT giants such as IBM, eBay and JPMorgan in patent applications in the Bitcoin industry have not been torn down. The latest patent application came from Colorado-based Western Union. According to a report, the company secured the rights to trade alternative currencies by filing a patent application on April 1. Apart from the sensational headlines, however, it is uncertain what effect these patent applications could have on the Bitcoin. The question as to whether the Bitcoin community should be pleased or concerned about such high profile patent applications remains unanswered.
Concerns for the crypto trader
A patent analyst and a Bitcoin enthusiast not only believe that this danger for the crypto trader is real, they even say the Bitcoin industry has to fight it. For this reason the founder of Cryptocurrency Defense Foundation (CDF) Reed Jessen tries to protect Bitcoin through strategic patent applications. "Our goal is to protect the new digital currencies from the repressive pressure of the patent system. We want to create a competition that is competitive in performance and not determined by state monopolies".
In general, the CDF wants to build a patent portfolio to protect and preserve the interests and economic ambitions of the Bitcoin community. Not least because already 65% of patent applications for digital currencies come from QUALCOMM and Visa. Jessen has taken a closer look at the latest patent applications from eBay, Gemalto and Western Union and analysed the potential impact on Bitcoin and other digital currencies.
Jessen is of the opinion that Western Union has obtained exclusive rights for a trading platform that allows the user to exchange Fiat currencies for digital currencies with the last patent application. Even if the law is much tighter in its implementation.
The system protected by the Western Union can, for example, publish a list of all people who are about to buy Bitcoins for Fiat currencies. The seller can then decide for himself which person he wants to trade with. The patent also provides an "assessor" to evaluate the offer based on the amount. This assessor provides both parties with the result of the evaluation and the parties can decide on the basis of the trade scores whether the deal will be concluded or not. However, such patents have only a limited effect on the Bitcoin industry. So Jessen:
"With this patent, the Western Union has the exclusive right for 20 years to appoint an assessor, but not the right to exclude people from using a trading platform. So if a trading platform has no expert function, the patent has no effect."
When asked by Coindesk, the company answered very vaguely and did not explain the background of the patent application:
"Western Union generally does not provide any information on the background of patent applications. In addition, we will continue to explore new facets of money transfer."
Unlike the Western Union patent, the patent called "System and Method for Managing Digital Currency Transactions" has not yet been approved. However, it has caused quite a stir, not least because eBay has announced that it is actively considering integrating digital currencies.
The patent filed in December 2011 checks whether the customer is buying a product that overlaps with an already purchased product.
Jessen describes it as follows:
"For example, if you plan to buy the album "Abbey Road" from the Beatles on iTunes and you've already bought "Maxwell`s Silver Hammer" before, the system will recognize that you already own a song and sell the "Abbey Road" minus Maxwell`s Silver Hammer for a reduced price.
But the Bitcoin could become part of the system, he says:
"The patent on the digital currencies affects the digital currencies in so far as the refund can be made in a digital currency like airline miles or Bitcoins.
The patent application that has the greatest relation to the digital currencies is the patent application for an "anonymous transaction method between two parties with the right of revocation".
The patent was created in April 2008 and is similar to the blockchain. The system also uses a public key, but adds further anonymity features. Jessen says the patent could have an impact on blockchain alternatives:
"They're working on a crypto currency scheme that would