The intellectual property of Bitcoin and Blockchain is growing at a rapid rate. This article distinguishes between the two concepts, as well as to provide examples of different types of intellectual property assets being pursued in the Bitcoin system and the related Blockchain distributed database.
Bitcoin is a cryptocurrency and a payment system invented by an unidentified programmer, or group of programmers, under the name of Satoshi Nakamoto. The system is peer-to-peer and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called the blockchain, which uses Bitcoin as its unit of account. Since the system works without a central repository or single administrator, the U.S. Treasury categorizes Bitcoin as a decentralized virtual currency. Bitcoin is often called the first cryptocurrency, although prior systems existed and it is more correctly described as the first decentralized digital currency. Bitcoin is the largest of its kind in terms of total market value.
Bitcoins are created as a reward in a competition in which users offer their computing power to verify and record Bitcoin transactions into the blockchain. This activity is referred to as mining and successful miners are rewarded with transaction fees and newly created Bitcoins. Besides being obtained by mining, Bitcoins can be exchanged for other currencies, products, and services. When sending Bitcoins, users can pay an optional transaction fee to the miners. This may expedite the transaction being confirmed.
In February 2015, the number of merchants accepting Bitcoin for products and services passed 100,000. Instead of 2–3% typically imposed by credit card processors, merchants accepting Bitcoins often pay fees in the range from 0% to less than 2%. Despite the fourfold increase in the number of merchants accepting Bitcoin in 2014, the cryptocurrency did not have much momentum in retail transactions. The European Banking Authority and other sources have warned that Bitcoin users are not protected by refund rights or chargebacks.
The following YouTube.com video explains The Bitcoin Blockchain:
Here appears a list of exemplary patents and patent applications relate to bitcoin technologies:
|9,569,771||Method And System For Storage And Retrieval Of Blockchain Blocks Using Galois Fields|
|9,436,935||Computer System For Making A Payment Using A Tip Button|
|9,219,824||Exchange Service For Wireless Communication Pricing Accessible By Wallet Applications|
|9,135,787||Bitcoin Kiosk/Atm Device And System Integrating Enrollment Protocol And Method Of Using The Same|
|20160371679||Virtual Currency Transaction Through Payment Card|
|20160358420||Gaming Platform Method With Backing Of In-Game Resource By Real World Resource|
|20160330031||Digital Currency Mining Circuitry With Adaptable Difficulty Compare Capabilities|
|20160321654||Method And System For Storage And Retrieval Of Blockchain Blocks Using Galois Fields|
|20160321629||Digital Content Rights Transfers Within Social Networks|
|20160261999||Exchange Service For Wireless Communication Pricing Accessible By Wallet Applications|
|20160086418||Digital Currency Enabled Vending Machine|
|20150363768||System And Method For Rendering Virtual Currency Related Services|
|20150294425||Methods, Systems, And Tools For Providing Tax Related Services For Virtual Currency Holdings|
|20150262176||Hot Wallet For Holding Bitcoin|
|20150262172||User Private Key Control|
|20150262171||Bitcoin Private Key Splitting For Cold Storage|
|20150262140||Send Bitcoin To Email Address|
|20150262137||Off-Block Chain Transactions In Combination With On-Block Chain Transactions|
|20150209678||Gaming Platform System And Method For Interactive Participation By Players With Successes And Losses Transacted Using Bitcoin|
Blockchain is a distributed database that maintains a continuously growing list of ordered records called blocks. Each block contains a timestamp and a link to a previous block. By design, blockchains are inherently resistant to modification of the data — once recorded, the data in a block cannot be altered retroactively. Blockchains are “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically.”
The following list of exemplary patents and patent applications relate to bitcoin technologies:
|9,569,771||Method And System For Storage And Retrieval Of Blockchain Blocks Using Galois Fields|
|20170048235||Crypto Captcha And Social Aggregating, Fractionally Efficient Transfer Guidance, Conditional Triggered Transaction, Datastructures, Apparatuses, Methods And Systems|
|20170048234||Social Aggregating, Fractionally Efficient Transfer Guidance, Conditional Triggered Transaction, Datastructures, Apparatuses, Methods And Systems|
|20170048209||Crypto Key Recovery And Social Aggregating, Fractionally Efficient Transfer Guidance, Conditional Triggered Transaction, Datastructures, Apparatuses, Methods And Systems|
|20170046698||Systems And Methods For Establishing And Enforcing Transaction-Based Restrictions Using Hybrid Public-Private Blockchain Ledgers|
|20170046693||Systems And Methods For Detecting And Resolving Data Inconsistencies Among Networked Devices Using Hybrid Private-Public Blockchain Ledgers|
|20170046689||Crypto Voting And Social Aggregating, Fractionally Efficient Transfer Guidance, Conditional Triggered Transaction, Datastructures, Apparatuses, Methods And Systems|
|20170046664||Systems And Methods For Tracking And Transferring Ownership Of Connected Devices Using Blockchain Ledgers|
|20170046652||Systems And Method For Tracking Behavior Of Networked Devices Using Hybrid Public-Private Blockchain Ledgers|
|20170046651||Systems And Method For Tracking Enterprise Events Using Hybrid Public-Private Blockchain Ledgers|
|20170041148||Blockchain-Supported Device Location Verification With Digital Signatures|
|20170034197||Mitigating Blockchain Attack|
|20170033932||Blockchain-Supported, Node Id-Augmented Digital Record Signature Method|
|20170031874||Blockchain And Deep Links For Mobile Apps|
|20170031676||Blockchain Computer Data Distribution|
|20170011460||Systems And Methods For Trading, Clearing And Settling Securities Transactions Using Blockchain Technology|
|20170005804||Systems And Methods Of Secure Provenance For Distributed Transaction Databases|
|20160358253||Electronic Currency Management Method And Electronic Currency System|
|20160358165||Cryptographically Concealing Amounts Transacted On A Ledger While Preserving A Network’s Ability To Verify The Transaction|
|20160342994||Method And System For Fraud Control Of Blockchain-Based Transactions|
|20160342989||Method And System For Processing Blockchain-Based Transactions On Existing Payment Networks|
|20160342978||Method And System For Integration Of Market Exchange And Issuer Processing For Blockchain-Based Transactions|
|20160342976||Method And System For Linkage Of Blockchain-Based Assets To Fiat Currency Accounts|
|20160321654||Method And System For Storage And Retrieval Of Blockchain Blocks Using Galois Fields|
|20160300234||System And Method For Decentralized Title Recordation And Authentication|
|20160292672||Systems And Methods Of Blockchain Transaction Recordation|
|20160283920||Authentication And Verification Of Digital Data Utilizing Blockchain Technology|
|20160267605||System And Method For Establishing A Public Ledger For Gift Card Transactions|
|20160212146||Peddal Blockchaining For Document Integrity Verification Preparation|
|20160191243||Out-Of-Band Validation Of Domain Name System Records|
|20160028552||System And Method For Creating A Multi-Branched Blockchain With Configurable Protocol Rules|
|20160027229||System And Method For Securely Receiving And Counting Votes In An Election|
|20150332283||Healthcare Transaction Validation Via Blockchain Proof-Of-Work, Systems And Methods|
|20150244690||Generalized Entity Network Translation (Gent)|
Blockchains are secure by design and an example of a distributed computing system with high byzantine fault tolerance. Decentralised consensus can therefore be achieved with a blockchain. This makes blockchains suitable for the recording of events, medical records, and other records management activities, identity management, transaction processing, and proving data provenance. This offers the potential of mass disintermediation and vast repercussions for how global trade is conducted.
The first blockchain was conceptualised by Satoshi Nakamoto in 2008 and implemented the following year as a core component of the digital currency Bitcoin, where it serves as the public ledger for all transactions. Through the use of a peer-to-peer network and a distributed timestamping server, a blockchain database is managed autonomously. The invention of the blockchain for Bitcoin made it the first digital currency to solve the double spending problem, without the use of a trusted authority or central server. The Bitcoin design has been the inspiration for other applications.
The following discussion by J. Leon Zhao, Shaokun Fan and Jiaqi Yan provides an overview of business innovations and research opportunities in blockchain and appeared in Financial Innovation (FIN), Volume 2, No. 3 (2016), published on 15 December 2016. The explanations below which have been extracted from the original indicate the amazing horizons ahead for Bitcoin and blockchain.
Blockchain has become a new frontier of venture capitals that has attracted the attention of banks, governments, and other business corporations. The recent blockchain related attempts included legal blockchains by Fadada.com and Microsoft and pork tracking blockchains by Walmart and IBM. Blockchain is poised to become the most exciting invention after the Internet; while the latter connects the world to enable new business models based on online business processes, the former will help resolve the trust issue more efficiently via network computing. The discussion from the authors give an overview on blockchain research and development. They show that while blockchain has enabled Bitcoin, the most successful digital currency, its widespread adoption in finance and other business sectors will lead to many business innovations as well as many research opportunities.
Since Blockchain was originally conceptualized by Satoshi Nakamoto in 2008 as a core component to support transactions of the digital currency – Bitcoin, blockchain has been known to be the public ledger for all transactions and resolved the double-spend problem by combining peer-to-peer technology with public-key cryptography. Literally, a blockchain is a chain of blocks of information that registers Bitcoin transactions; of course, there is a stringent set of rules that govern how to verify the validity of the block and make certain that the block will not be altered or disappear. The algorithms and the computational infrastructure of creating, inserting, and using the blocks are considered as the blockchain technology.
While Blockchain was born with Bitcoin, its applications have gone far beyond Bitcoin or digital currency. Many people believe that blockchain could revolutionize many fields, such as finance, accounting, management, and law leading to three generations of blockchains, namly, Blockchain 1.0 for digital currency, Blockchain 2.0 for digital finance, and Blockchain 3.0 for digital society. Interestingly, Blockchain 1.0 took a few years to mature starting from 2008, Blockchain 2.0 and 3.0 have emerged almost in parallel in an explosive manner around 2015. Nevertheless, while many experimental projects have mushroomed, it will take some years for Blockchain 2.0 and 3.0 to take hold and create real economic impacts.
The blockchain technology solves the double-spend problem with the help of public-key cryptography, whereby each user is assigned a private key and a public key is shared with all other users. The main idea of blockchain is a distributed database comprising records of transactions that are shared among participating parties. Each and every of these transactions is verified by the consensus of a majority of the participants in the system, making fraudulent transactions unable to pass collective verification. Once a record is created and accepted by the blockchain, it can never be altered. Existing research on blockchain has been mainly focused on system efficiency, security and innovative applications.
By design, efficiency is one of the most important concerns for blockchain. Blockchain requires a very strict verification process to create a new transaction record, which leads to a significant latency of confirmation time and waste of computing resources. Currently, it takes about 10 min for a transaction to be confirmed. In addition, thousands of nodes are running to compute and verify transactions. These issues limit the scope of blockchain applications to a large extent. For example, current blockchain techniques are generally not suitable for the Internet of Things (IoT) network, because IoT devices may have to work with low computational capability or very low power (Atzori 2016).
Some pioneer work has been done to improve the efficiency of blockchain. Zyskind et al. (2015) proposed a lightweight blockchain architecture to protect personal data. They improved the efficiency of blockchain by using off-chain data storage and heavy processing. Only references to data and lightweight processing tasks were handled in the blockchain. Paul et al. (2014) proposed a new scheme that could lead to an energy-efficient Bitcoin. The authors modified added some extra bytes to the present block header to utilize the timestamp more effectively.
Blockchain technology includes several preventive mechanisms (e.g., distributed consensus and cryptography) to reduce risks of cyber-attacks. According to Underwood (2016), immutability and other features to secure transaction are the top benefits considered by early adopters of blockchain in the finance sector. However, blockchain has been identified to be vulnerable to many types of attacks. The 51% attack is unique to blockchain and it happens when a single node controls more than half (51%) of processing power of the blockchain. The node can dominate all other nodes, manipulate the records in a the blockchain (Yli-Huumo et al. 2016). According to an analysis of the trend of security breaches in Bitcoin (Lim et al. 2014), the authors found that many security breaches had occurred, including DDoS attacks and private account hacking. Furthermore, privacy and confidentiality is still a problem with blockchain, because all the nodes of the blockchain have access to all the data (Atzori 2016).
The financial service sector, which must be innovate to cut transaction costs due to severe competitions in today’s globalized economy, is leading the way with blockchain-related business innovations. Blockchain has been proposed as an innovative solution to areas such as clearing and settlement of financial assets, payment systems, smart contracts, operational risks in financial market, and so on (Kakavand et al. 2016; Peters and Panayi 2015).
One notable example of blockchain application in the financial market is chain.com, which is a startup backed by NASDAQ (Crosby et al. 2016). They aim to provide a platform for private equity exchange on top of BlockChain. In non-finance sectors, the applications of blockchain are getting more and more attention. In 2015, the Bitcoin Foundation started a new project that aims to develop a blockchain-based voting system, which “provides even greater transparency into the voting process, with every vote being recorded on the blockchain”.
In supply chain management, blockchain technology provides a groundbreaking solution to product provenance (Kim and Laskowski 2016). A shared, consensus-based public ledger is used to track the origin and the processes in the supply chain. Other examples of blockchain applications are digital right ownership management, notary services, and so on (Crosby et al. 2016).
In summary, the blockchain technology is still at an early stage of development and further research is needed to enhance its efficiency and security. Researchers are confronted with many opportunities as well as challenges to make blockchain successful in various business domains as illustrated by the seven papers in this special issue that explore the contemporary theories or state-of-the-art technologies of blockchain.
As the technological capacity of the blockchain is being harnessed by companies to address real-world problems, it is important to understand the guidelines for adopting this revolutionary system. IT maturity model has long been applied to evaluate and guide software development processes. However, due to the unique social and technical features of blockchain, how to evaluate and guide blockchain development has been fully covered in previous literature. This is the issue addressed by Wang et al. (2016) in his paper, “A maturity model for blockchain adoption”. Using a comparative analysis method, Wang et al. proposes a five-stage maturity model with four dimensions for blockchain system adoption. A progressive procedure is also proposed to guide the adoption of blockchain systems.
One of the most attractive features of blockchain is its security mechanism based on public ledger and distributed consensus. However, this does not mean that blockchain can resist any types of fraud and hacking. In her paper, “Are Blockchains Immune to All Malicious Attacks”, Xu (2016) explores the types of fraud and malicious activities that can be prevented by blockchain technology and identifies attacks to which blockchain remains vulnerable. She also recommends appropriate defensive measures for fighting malicious activities that may compromise the security of blockchains.
While blockchain has captured attention of people from many industries such as property management, auditing, and copyright protection, finance has been the first and most important application area of the technology so far. In their paper, Zhu and Zhou (2016) propose to use Blockchain to address some critical issues in equity crowdfunding in China, which is an emerging field of Internet Finance. Based on their analysis, blockchain can help achieve efficient and low-cost equity registration, equity transaction and transfer, and shareholder voting in the crowdfunding industry, eliminating legal risks related to fund management. It can also help regulators supervise and understand the crowdfunding market.
Many people believe that blockchain will become the next generation technology that can revolutionize banking industry. It is still not clear that which specific areas of banking businesses can benefit the most from this disruptive technology. In the paper titled “Blockchain Application and Outlook in the Banking Industry”, Guo and Liang (2016) propose that payment clearing system and bank credit information systems can be the appropriate scenarios of blockchain application. The blockchain technology can be used to solve issues such as lack of mutual trust, high transaction cost, and fraud.
The development of smart cities benefits from innovative applications of new information and communication technologies. People are wondering what the blockchain technology can contribute to make a smart city. Sun et al. (2016) investigate this question from a sharing economy perspective. They explore a set of fundamental factors that make a city smart, and discusses what the emerging blockchain technology may contribute to these factors.
Blockchain was originally invented to support the operation of the digital currency (Bitcoin), which is still considered as the most successful application of blockchain so far. However, the well-known 51% attack is a major security concern of blockchain based system. In the paper titled “A New Proof-Of-Work Mechanism for Bitcoin”, Shi (2016) proves that the computing power in Bitcoin system can be concentrated in a single node under the current proof-of-work design. He also proposes a new proof-of-work mechanism that encourages more nodes to participate in Bitcoin mining and reduces the risk of 51% attack.
In the cyber world, people often make transactions with others that they have not met with. Reputation systems have been widely used in the cyberspace as an effective way to allow people to evaluate the trustworthiness of a potential seller. However, current reputation systems are vulnerable to fraud rating and the detection of fraudulent raters is difficult since they can behave strategically to camouflage themselves. This is the problem addressed in the paper “Fraud Detections for Online Businesses: A Perspective from Blockchain Technology”, by Cai and Zhu (2016). They explore the potential strengths and limitations of blockchain based reputation systems under two attack goals: ballot-stuffing and bad-mouthing. They find that Blockchain systems are effective in preventing bad mouthing and whitewashing attack, but they are limited in detecting ballot-stuffing under Sybil attack, constant attacks and camouflage attack.
While these seven papers are quite interesting to read, they are by no means free from ambiguities, oversights, and even misconceptions. However, it is the nature of research, particularly in the exploratory stage, that researchers venture into unknown areas with their best of abilities. Regardless, this special issue offers readers interested in business research about blockchain a convenient place to get started. We hope that they will open the eyes of other researchers and help them to decide if they will join this great effort.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.