Thursday 20 July 2017

Bitcoin pioneers racing to patent in-demand blockchain ideas

Byron Kaye and Jeremy Wagstaff

The man who last year made global headlines by claiming to be Satoshi Nakamoto, the creator of bitcoin, is working with an online gambling entrepreneur to file scores of patents relating to the digital currency and its underlying technology, blockchain.

Craig Wright, the Australian computer scientist who made the Satoshi claim, has the backing of Calvin Ayre, a wealthy Canadian entrepreneur, according to people close to Wright and documents reviewed by Reuters.

Ayre has been indicted in the United States on charges of running online gambling operations that are illegal in many US states - an accusation he rejects.

Wright's expertise combined with Ayre's support make a potentially formidable force in shaping the future of bitcoin and blockchain, the ledger technology that underlies digital currencies.

Wright and his associates have lodged more than 70 patent applications in Britain and have plans to file many more, according to documents and emails reviewed by Reuters and sources with knowledge of Wright's business.

The patents range from the storage of medical documents to wifi security, and reflect Wright's deep knowledge of how bitcoin and blockchain work.

Their total compares with 63 blockchain-related patents filed globally last year and 27 so far this year by multinationals from credit card companies to chipmakers, according to Thomson Innovation.

Neither Wright nor Ayre would comment on their business relationship, or their goals. But their interest in bitcoin and blockchain highlights two key trends.

First, an increasing number of entrepreneurs believe blockchain, which can circumvent the need for big financial intermediaries, will challenge traditional payment systems.

Various banks are investing large sums to explore how blockchain could revolutionise payment systems and cut costs.

Bitcoin involves sending payments directly, securely and potentially anonymously between two people's digital wallets, whereas all mainstream transactions, including those using intermediaries like Paypal and credit card lenders, run through banks and usually require named accounts and verification.

Second, blockchain has the potential to defy authorities trying to enforce borders and national regulations - and it already does so in areas such as online gambling. In internet chatrooms some online gamblers say that using bitcoin enables them to disguise their identity and transactions.

The confidentiality conveyed by the currency is one source of its popularity. Bitcoin hit a record high this week, partly because of speculation that the first bitcoin exchange-traded fund is set to receive US regulatory approval. After a sharp rise this year, the cryptocurrency reached more than $1,200 per bitcoin.

Ayre said last year that he saw a "growing convergence" of bitcoin and online gambling, according to the website CalvinAyre.com. Documents reviewed by Reuters show Wright's links to online gambling go back decades and that bitcoin grew out of code originally developed with gambling in mind.

Early bitcoin code, seen by Reuters and analysed by a computer coding consultant with no ties to Wright or any blockchain-related project, contains unimplemented functions related to poker. (Reuters)

Irish Independent

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