Coinbase files for a patent for making secure bitcoin payments

The cryptocurrency exchange Coinbase has recently filed for a patent. The patent is for a new system that would enable online users to make their bitcoin payments more securely.

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Payments could be made directly from users" bitcoin wallets..

The patent application refers to the issue of users being required to compromise on the security of their own private keys: “Existing systems do not provide a solution for maintaining security over private keys while still allowing the users to checkout on a merchant page and making payments using their wallets.”

The new system will involve a "key ceremony" which encrypts the users private passphrases into a masterkey during the checkout process. This greatly reduces the risk of keys being stolen during the process. The masterkey encrypts private keys and transactions signing. Once used the key is then deleted.

Processes can be frozen when hacking or identity theft suspected

In the event that a user reports they are being hacked or their identity assumed the system allows administrators to freeze all processes. The patent application notes: “At any point in time after the master key is loaded, the system can be frozen. The system can be unfrozen after it has been frozen using keys from the key ceremony. The checkout process can be carried out when the system is frozen and when the system is unfrozen. The payment process can only be carried out when the system is unfrozen.”

Other websites and services can use payment system through an API

Wikipedia describes an API or application programming interface as follows: "In computer programming, an application programming interface (API) is a set of subroutine definitions, communication protocols, and tools for building software. In general terms, it is a set of clearly defined methods of communication between various components. A good API makes it easier to develop a computer program by providing all the building blocks, which are then put together by the programmer. An API may be for a web-based system, operating system, database system, computer hardware, or software library. An API specification can take many forms, but often includes specifications for routines, data structures, object classes, variables, or remote calls. POSIX, Windows API and ASPI are examples of different forms of APIs. Documentation for the API is usually provided to facilitate usage and implementation."

The Coinbase API will enable the new bitcoin system to be used by other websites and services.The API has two parts. One part will be stored on the Coinbase web service and the other on the user/host server providing an extra security measure. Transactions will be confirmed only if the API key received from the web server matches the key stored by the service. A system such as this that allows secure bitcoin payments through multiple websites could be widely adopted in the cryptocurrency space.

Coinbase's views on patents

Coinbase has applied for numerous patents related to bitcoin in the past. Nine were filed back in 2015 alone. Critics have accused Coinbase of attempting to create a monopoly in bitcoin services. CEO Brian Armstrong has replied to his critics in a blog post: "I’d personally prefer to see a world where software patents don’t exist (I think they hurt innovation, and waste a lot of time/money), but since they do exist, we have to take them seriously. Patents in business are a form of warfare, and it’s a dangerous world out there.

Our ultimate goal in obtaining bitcoin related patents is to keep them out of the hands of bad people, use them defensively to protect Coinbase from patent trolls, and help ensure the bitcoin ecosystem continues to grow."

Read more: http://www.digitaljournal.com/tech-and-science/technology/coinbase-files-for-patent-on-new-payment-bitcoin-payment-system/article/529761#ixzz5RZi3BQbW

US financial giant JPMorgan Chase seeks a patent on a blockchain system

The huge US-based financial institution, JPMorgan Chase is seeking a patent on a system that would used distributed ledgers, a blockchain system, to facilitate and reconcile financial transactions.

The patent

The patent application was published by the US Patent and Trademark Office on Thursday. The original application had been filed in October of 2017. The application notes:

[0003] Distributed ledgers, such as Blockchain, provide a unique system for recording transactions and storing data. In general, distributed ledgers hold a log of transactions (events) that may be replicated across a public or private distributed network. Cryptography and digital signatures may be used to determine valid parties and transactions such that all parties/observers agree on the order and state of the ledger in real-time without having to rely on a trusted third party to hold the true "golden copy." The distributed ledger thus provides a practically immutable, verifiably true audit trail.

JPMorgan Chase

Headquartered in New York City, JPMorgan Chase & Co, is a US-based multinational bank and financial services holding company. It is the largest bank in the US. It is also the second largest bank in the world by market capitalization. As of 2017-18 the company is one the largest asset management companies in the world with $2.789 trillion under management.

The hedge fund unit is the second largest hedge fund in the US. As of 2017, the company had 252,539 employees

JPMorgan Chase is one of the four American Big Banks the others being Bank of America, Wells Fargo, and Citigroup.

JPMorgan explains the patent

A company statement said:"In one embodiment, a method for processing network payments using a distributed ledger may include: (1) a payment originator initiating a payment instruction to a payment beneficiary; (2) a payment originator bank posting and committing the payment instruction to a distributed ledger on a peer-to-peer network; (3) the payment beneficiary bank posting and committing the payment instruction to the distributed ledger on a peer-to-peer network; and (4) the payment originator bank validating and processing the payment through a payment originator bank internal system and debiting an originator account."

The blockchain would be an improvement on the existing system in that it would allow real-time settlement more cheaply and quickly than possible under the present system which often involves several messaging networks and clearing intermediaries before the payment can flow.

The bank had already launched an etherium-based platform, Quorum, prior to the patent application

Just a few days before filing the patent application the bank had already launched Quorum an ethereum-offshoot which is designed for the services that the patent outlines. Emma Loftus, head of global payments and foreign exchange for JP Morgan Treasury Services said: "Blockchain capabilities have allowed us to rethink how critical information can be sourced and exchanged between global banks."

The company announced the Quorum service in an article on October 16th last year.

Previously published in Digital Journal

Apple and Samsung suits about restricting competition

The constant refrain from business is that competition is great and the lifeblood of capitalism. Yet the expensive court cases between Samsung and Apple show the opposite. Global capitalism is now to a considerable extent all about patents.

Patents give corporations monopoly rights. These rights prevent competitors from producing products at a lower cost that contain patented features. Patents provide corporations with cash cows that enable them to milk consumers by charging prices that would not exist in a truly competitive market structure.

Even free trade deals are not so much about competition as about restricting competition. Part and parcel of free trade deals are TRIPS(Trade Related Aspects of Intellectual Property Rights). Part of the provisions on patents reads as follows:

Patents must be granted for "inventions" in all "fields of technology" provided they meet all other patentability requirements (although exceptions for certain public interests are allowed (Art. 27.2 and 27.3)[4] and must be enforceable for at least 20 years (Art 33).

In order to enter a so-called Free Trade agreement a country must grant corporations monopoly rights for at least 20 years and allow patents in all fields of technology. It is in this context that the dispute between Apple and Samsung should be viewed. The suit is about the rights of Samsung and Apple to sell products to you the consumer in a manner that restricts competition. The result is that prices for their products will be much higher than if they were being produced in a market without patents. For some reason when business people talk about government intervention in the market, patents are never mentioned. Without governments passing laws to give these rights there would be no patents.

We now have the results of two cases in which Apple and Samsung sued on the basis of patent infringement. In South Korea where Samsung is headquartered the court ruled against Apple's position that Samsung had copied the design of the iPhone. The court also ruled that Apple had infringed two Samsung patents related to mobile broadcasting technology. However, the court also ruled that Samsung had violated an Apple patent. The judge ruled that many of Apple's claims of design patents were not valid since they had already appeared in inventions of Japanese and European countries. As a result of the court decision Samsung will be banned from selling 10 of its products in South Korea and Apple four products.The Korean judge's views on Apple design patents were quite different than those of a U.S. jury.

The U.S. trial took place in San Jose California just a few miles from the headquarters of Apple. The jury found that Samsung had copied key features of the iPhone and iPad and Apple was awarded $1.051 billion in damages. The decision will mean that Apple has successfully limited Samsung's competitive challenge and that sales of some key Samsung products will be banned. The free market triumphs again.

Apple is already the biggest company by market value in history. With the money from the Samsung settlement Apple can file more suits against other companies to further boost their economic rents due to patent monopolies. The result of these trials confirm the importance of monopoly power in modern global capitalism.The costs of ensuring the continued triumph of these powers will be passed on to consumers in the price of Apple and Samsung products.