While on the topic of patents and Bitcoin, we take a moment to explore the area in more detail and see which other big names have brought Bitcoin into their patent activity. These can give a clue as to how much big companies are seriously anticipating potential for cryptocurrency.
First, Stockholm-based Ericsson. The patent, filed in December 2011, is titled, “System and method for implementing a context based payment system.” The idea is to make the value of electronic currency or coupons, and the goods for which they are coming to redeem, intelligently dependent upon their “context.” One of these currencies is Bitcoin:
Some currencies only exist in electronic form, such as “bitcoin.” Bitcoin is a peer-2-peer electronic payment system, but is only equivalent to regular currency. Alternative markets are being discussed, but even in such markets the same rules as in the regular market would apply.
The other notable patents have been assigned to Nevada-based IGT, a major manufacturer of gaming machines. One of those patents is titled, “Gaming system, gaming device and method for utilizing bitcoins.” The claim is to be able to wager with Bitcoins.
Other patents of note are still in their application status. Two are from eBay. One filed in 2012 calls for a “gift token”, probably to be used with PayPal. It does not explicitly mention Bitcoin. Another filed last year does:
“A non-exhaustive and example list of currencies capable of being exchanged may include frequent flyer miles, loyalty and reward points (e.g., credit card reward points, hotel loyalty points, retail loyalty points), virtual currency, cash, Bitcoins, Facebook credits, eBay bucks, cash-equivalent currency (e.g., gift cards, travellers checks, cashier’s checks), and any other form of currency.”
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The media was thrown into a bit of a frenzy when JP Morgan applied to patent a payment system last year which bore some resemblance to Bitcoin. It featured a “digital wallet” and the ability to make payments to anyone anonymously. Addresses behave like a private lockbox in that you can only send funds to them, but not the reverse.
It is worth noting that despite the plethora of Bitcoin-related startups and venture activity, there has been comparably little by way of patents. A search for “bitcoin” in the USPTO database yields but 50 results for applications and 12 results for accepted patents.
Searching for “virtual currency”, there are currently 1519 applications and 414 patents.
In the vast majority of cases, the patent itself is not directly concerned with Bitcoin or virtual currency, which are tangentially referenced as part of the main discussion. “Virtual currency” in most of these contexts not necessarily p2p or decentralized, rather a digital medium of value as opposed conventional currency.
Amazon’s mention of Bitcoin, on the other hand, may be the most relevant based on its implied reference to small payments for one-off tasks.
As for Bitcoin itself, it appears that there has been no explicit patent activity. There was a patent application for encryption and networking technologies similar to those of Bitcoin, followed by registration of the bitcoin.org domain 72 hours later. The phrase “computationally impractical to reverse” was found both in the Bitcoin White Paper and the patent.
Indeed, the bulk of Bitcoin inventions, while usually innovative and intelligent, are essentially the application of existing technologies to enhance or revolutionize how we practice finance. This is not to mitigate their importance, rather to explain why they may be not so patentable.