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Bitcoin World Touts Bank of America’s Patent Application for “System And Method For Wire Transfers Using Cryptocurrency”

As technology advances, foreign transactions have become more common. Enterprises handle a large number of foreign wire transfer requests on a daily basis. For some customers, it may be desirable to conduct a foreign wire transfer in less time than what current foreign wire transfer systems allow.

Today, many banks and financial operators are warming up to the potential of digital currencies to reduce the time and cost of fund transfers, especially cross-border transfers. A cryptocurrency is typically a peer-to-peer, decentralized, digital currency whose implementation relies on the principles of cryptography to validate transactions and generate the currency itself. Some examples of cryptocurrencies are: Bitcoin, Litecoin, Ripple, Peercoin, and Dogecoin.

Cryptocurrency-mediated transfers permit completing a foreign fund transfer in less time than traditional wire transfers, avoiding delays that may be caused by third party systems and services.  Furthermore, transferring funds using a cryptocurrency reduces the need to transfer customer data to third-party systems, thus increasing control and security of customer data. Fund transfers using cryptocurrency can reduce the reliance on third party systems and the transfer of customer data to third party system, thus increasing control and security of customer data.

In some instances, a cryptocurrency, such as MintChip, may be backed by a government (e.g., Canada). Examples of cryptocurrency exchanges [we may interface with to purchase, sell, or transfer cryptocurrency] are OKCoin, BitStamp, BTCChina [now BTCC], Cryptsy, CoinMarket [sic], Justcoin.

Bank of America (BoA) has filed a patent application titled “System and Method for Wire Transfers Using Cryptocurrency .” The application was filed in March and published on September names inventors  Thomas Edward Durbin of Waynesville, NC, and James Gregory Ronca of Decatur, GA.  By this patent application filing, BoA wants to patent the concept of using a cryptocurrency as a transparent intermediate step for fiat currency transfers.

This is just one of many U.S. patent applicaions recently being published and prosecuted through the USPTO relating to cryptocurrencies. For example, on the same day that the BoA patent application published, the nine other applications from Coinbase Inc. (U.S. Patent Applications Nos. 20150262176 for a “Hot Wallet For Holding Bitcoin”; 20150262172 for “User Private Key Control”; 20150262171, “Bitcoin Private Key Splitting For Cold Storage”; 20150262168, “Instant Exchange”; 20150262141, “Personal Vault”; 20150262140, “Send Bitcoin To Email Address”; 20150262139, “Bitcoin Exchange”; 20150262138, “Tip Button”; and 20150262137, “Off-Block Chain Transactions In Combination With On-Block Chain Transactions.”

The BoA filing is focused on making cross-border transactions faster than what current foreign wire transfer systems allow. BoA claims that the system described in the patent application can reduce or eliminate disadvantages and problems associated with traditional wire transfers by bypassing traditional wire services, reducing the dependency on third party networks, and increasing the reliability of fund transfers.

The described and claimed system includes a memory and a processor. The processor is coupled to the memory and causes the system to receive an electronic request for a fund transfer and initiate a debit of a first amount of a first currency from a customer account.  If using cryptocurrency is found to be optimal, the system determines which cryptocurrency or exchange should be used.  For example, the system may choose a particular cryptocurrency exchange because the cryptocurrency is priced favorably (e.g., cheap if purchasing, expensive if selling) or because the cryptocurrency exchange has a relationship with the enterprise using the system.  Determining which cryptocurrency to use depend upon cryptocurrency price, volatility of the cryptocurrency, popularity of the cryptocurrency, availability of the cryptocurrency at a local cryptocurrency exchange, availability of the cryptocurrency at a foreign cryptocurrency exchange, or any potential risk factor that may be associated with a particular cryptocurrency.

In response to determining that using cryptocurrency is optimal, the processor can transfer the first amount of the first currency into an account associated with a first cryptocurrency exchange and initiate the purchase of a first quantity of a cryptocurrency from the first cryptocurrency exchange.

The BoA filing describes an alternative to traditional wire transfers. Initiating fund transfers using cryptocurrency allows for the technical effect of conducting a foreign fund transfer in less time than a foreign fund transfer currently, as it avoids delays that may be caused by relying on third party systems and services. In certain embodiments, components of the system may initiate fund transfers using cryptocurrency bypassing the use of traditional wire services thereby reducing dependency on third party networks and increasing the reliability of fund transfers

The BoA system includes a memory and a processor. The processor is coupled to the memory and causes the system to receive an electronic request for a fund transfer and initiate a debit of a first amount of a first currency from a customer account.  The processor may communicatively couple to the memory and cause the system to receive an electronic request for a fund transfer from the customer and initiate a debit of a first amount of a first currency from the customer account.

The memory may store a customer account associated with a customer and be able to initiate the transfer of at least a portion of the second amount of the second currency to a recipient. In such a process, funds are first transferred to a cryptocurrency exchange, then converted to a cryptocurrency such as bitcoin, then sent to another exchange, and finally converted into another currency for the recipient.

The Bank of America patent application appears to be the first bank authored cryptocurrency application since Let’s Talk Bitcoin reported last October that community bank, “Independence Bancshares [was] Studying Virtual Currencies.” It also appears to be the first application from a major retail bank.

It seems likely that BoA is trying to claim ownership of cryptocurrency-mediated fund transfers, which might become commonplace soon. The BoA patent application tries to cover both existing and future cryptocurrencies, and all systems that use a cryptocurrency as a transparent intermediate step for fund transfers in fiat currencies. As usual with patents, the application tries to cover all possible technical implementations and use cases, and defines cryptocurrencies in a generic way.