Blockchain technology has become increasingly important today. For a comprehensive overview of blockchain technology and how cryptocurrency works, please refer to our February series that discusses blockchain technology and cryptocurrency in-depth. In this post, we discuss patents in blockchain based technology.
How Does Blockchain Technology Work?
In general, blockchain technology refers to the use of a specialized, digital ledger that is used to record cryptocurrency transactions. These transactions are recorded chronologically and verified by the community that trades and mines that cryptocurrency. Cryptocurrency refers to currency that is virtual and digital and relies on encryption techniques to regulate and validate the generation of more units of that particular cryptocurrency. Together, this technology can be used to transfer funds and self-validate and verify that transfer of funds. In essence, cryptocurrency exchanges allow for currency transactions to operate independently and outside of the traditional banking system. Therefore, an owner of patents in blockchain based technology systems and methods would obtain an upper hand in the blockchain market.
Patents In Blockchain Based Technology System
While cryptocurrency and blockchain technology has existed for over a decade now, there have been very few attempts to file for patents or similar forms of intellectual property protection to cover the growing technology. In October of 2017, JPMorgan Chase (“Chase”) filed a patent application that seeks to cover a system that would be used to protect distributed ledgers and blockchain-technology based systems that facilitate their virtual financial transactions.
In particular, the patent application looks to cover distributed ledgers (blockchains) that would work by recording transactions and storing data through these ledgers. Because these ledgers would log the transactions and can be replicated across both public and private networks, the patent would seek to also cover associated cryptocurrency and the digital signatures used in connection with these ledgers. In blockchain technology and cryptography, these digital signatures are used to validate both the parties and the transactions in order to ensure that the cryptocurrency and blockchain-based transactions are accurate.
JPMorgan Chase Seeks to Patent Basic Blockchain Technology System
Specifically, Chase is hoping that the patent will be granted to cover their method for processing the payments through their distributed ledger network. In explaining their patent, Chase states that it would cover all steps of that basic blockchain technology systems which generally include: 1) the payment originator that initiates the payment to the beneficiary; 2) the payment originating bank posting and instructing payment to be committed to the distributed ledger on the blockchain network; 3) the payment beneficiary bank instructing payment to be committed and posted on the distributed ledger; and 4) the payment originator bank validating and processing payment through the originator bank’s internal system while simultaneously debiting the originator account.
While Chase waits for the U.S. Patent and Trademark Office to rule on the patent, it has already launched its own cryptocurrency-focused transaction service. Known as Quorum, the service and product is designed to capitalize on the system that the patent application would protect. To clarify, etherium is another cryptocurrency similar to bitcoin and among many of the new and rising cryptocurrencies that now exist.
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