Bank of America Blockchain Patents Continue to Accumulate but Future Plans Still Remain Unclear
Bank of America (“Bank”) has been developing a strong collection of blockchain and cryptocurrency-related patents. Right now, the company has over 50 applications in the same area.
Many are considering this to be part of an effort to succeed in an informal blockchain patent race with platforms such as Alibaba and IBM. Despite the patents though, the Bank is still recognized as being skeptical about cryptocurrencies.
The Bank’s first patent related to blockchain technology was filed in 2014 and published with the U.S. Patent and Trademark Office (USPTO). The Bank called the patent the “Wire Transfer Using Cryptocurrency,” but interestingly enough, it did not feature the term “blockchain” but still featured a system whereby funds are transferred between accounts with underlying technology of crypto.
The application seemed to be one of the initial crypto-related applications issued by a U.S> bank and it isn’t surprising that the move was led by the Bank. The Bank initially began covering bitcoin in 2013 when it published a report by several strategists entitled
“Bitcoin: a first assessment. Bitcoin could become a major means for e-commerce and many emerge as a serious competitor to traditional money-transfer providers. As a medium of exchange, Bitcoin has clear potential for growth.”
At the time, the USPTO issued the Bank another patent, it joined R3, which includes over 200 members, some of which are banks, and other trade associations, fintech companies, and more. Together, they work to develop blockchain solutions. Upon performing the “Wire Transfers Using Cryptocurrency” entry, the Bank has been accumulating patents. For instance, in December 2015, the USPTO published another ten patents that had been filed by the bank in 2014. Each of the patents feature the term “cryptocurrency” and also a system called the “Offline Vault Storage System.”
Thereafter, the bank announced preparations to file 20 more applications with the USPTO. Catherine Bessant, the Bank’s Chief Operations and Technology Officer reported to CNBC:
“As a technologist, the technology is fascinating. We have tried to stay on the forefront. I think we have somewhere around 15 patents, most people would be surprised at Bank of America with patents in the blockchain or cryptocurrency space.”
As of June 2018, the Bank has been leading the patent race, bypassing companies such as IBM and Alibaba, and its direct competitors.
The Bank’s efforts do not seem to be leaning toward the development of actual products or that it is a crypto bull. Rather, the bank seems to prioritize registration of the technology, over its actual use. Bessant, in a 2016 interview, reported to CNBC that the blockchain-related patents are “very important . . . to reserve our spot even before we know what the commercial application might be.” At a fintech event, she also stated, “We’ve got under 50 patents in the blockchain/distributed ledger space . . . While we’ve not found large-scale opportunities, we want to be ahead of it, we want to be prepared.”
Even with the Bank’s efforts, it has recognized that the technology is also a threat to its business model. The Bank stated,
“Clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies.”
In August 2018, a blockchain specialist at ConsenSys who worked at the Bank for over 11 years announced on Twitter that to him, being named as an “8 of 50” blockchain patents inventor was “meaningless.” HE stated that the filings were to attract good press coverage and to show that the bank was progressive concerning fintech.
At this point, the Bank’s latest patents include private keys storage and cryptocurrency exchange systems. The Private Keys is the most recent filing and it was confirmed on October 30. The filing states:
“While many . . . devices may provide for acquiring evidence of a security beach (i.e. physician or non-physical tampering with device and/r the data), such devices do not provide for real-time response to such breaches, such that misappropriation of private cryptography keys is prevented. Therefore, a need exists for a secure means for storing private cryptography keys. The desired storage means should reduce the risk of misappropriation of keys due to the keys being stored internally within a computer node that is frequently or, in some instances, continuously accessible via a public communication network, such as the internet.”
As for multiple digital signatures, this is a second type of technology that the Bank has patented. The patent features a system that allows for data communication management through internet-connected devices. The document identifies that “the invention provides automated determination of which devices are communicating to which third-party entities, and in some embodiments, the type of data being communicated to such third party entities.” The system works for products in an internet of things environment and it identifies communication between the devices.
Next is external validation. The Bank proposed using blockchain to track resource information and to confirm transfers, stating that “a need currently exists for providing a more accurate indication of a user’s financial strategy by allowing external validation of data in a process data network.” The patent also identifies the system’s ability to record information within the blockchain due to “aggregated information associated with past transfer of resources executed by an entity.”
Data storage is another type of patent filed in 2016. The bank describes it as a blockchain-powered system that allows for the authentication of data and it addresses issues concerning tacking and transferring. As the patent notes,
“Embodiments of the invention utilize a private blockchain to store various types of records to be conveyed to service providers. In this way, the individual or entity may securely store on the blockchain all records relevant to service provides, then provide the service provides with secured access to said records, such that the provides may access only the specific records for which they are authorized, e.g. a healthcare provider may access only the healthcare records on the blockchain.”
The patent also discusses disadvantages concerning conventional methods of record sharing, stating “they lack a build-in mechanism for authenticating records.” Using a blockchain system would enable a more efficient, secure, and reliable method for storing records.
Finally, the Bank also received a patent for a cryptocurrency exchange system. The system promote conversion of digital currency to another currency – all automatically. The exchange rate would be determined by external feeds. The filing states,
“Enterprises may handle a large number of financial transactions on a daily basis. As technology advances, financial transactions involving cryptocurrency have become more common. For some enterprises, it may be desirable to exchange currencies and cryptocurrencies.”