On Tuesday, the US Patent and Trademark Office (USPTO) published patent applications for three major financial services companies: Bank of America, Wells Fargo, and Mastercard. Each application describes a different blockchain-related project, from data validation to linking fiat currencies with crypto.
Bank of America
This multinational banking corporation's patent application calls for external data validation in a "process data network." The inventors seek to accomplish this through a blockchain that stores resource information, including the aggregation of transaction activity.
The application explains the potential need for such a blockchain data system:
"Resource aggregation technology has been available in various forms for many years. Resource aggregation providers typically have direct data feeds with various entities thereby providing aggregated statistical data associated with a user's resources. However, not all transfer of resources executed by the user are captured. As such, a need currently exists for providing a more accurate indication of a user's financial standing by allowing external validation of data in a process data network."
The bank seems to want to confirm users' financial standing by validating data from different financial institutions. In the application, the inventors discuss the use of an EDCC (aka smart contract) to compare sources of information.
The San Francisco-based financial services company's patent application describes a tokenization system to protect data. This system would use cryptography (possibly through hashing) to encrypt data elements into tokens that only specific users have access to. The described methods would "address the requirement to protect data even when it is stored in a publically [sic] accessible environment, such as the cloud, within a blockchain or distributed ledger, in a flexible way that is file and data element neutral."
The output of generated tokens may also vary. It "can be a random number, a string of text, a shape or shading, a phrase, access instructions, a URI with a query string, and the like."
The credit card giant is back at it again with the USPTO – this time, for a system to link assets between fiat and crypto accounts. The patent application outlines the use of centralized accounts to manage fractional reserves of both fiat currency and cryptocurrency, as well as the processing of blockchain transactions through traditional payment networks.
Apparently, Mastercard sees a need to improve upon cryptocurrency storage and transaction processing, especially to address potential fraud and theft. The company believes that traditional financial systems may help. According to the application:
"Existing payment networks and payment processing systems that utilize fiat currency are specially designed and configured to safely store and protect consumer and merchant information and credentials and to transmit sensitive data between computing systems. In addition, existing payment systems are often configured to perform complex calculations, risk assessments, and fraud algorithm applications extremely fast, as to ensure quick processing of fiat currency transactions. Accordingly, the use of traditional payment networks and payment systems technologies in combination with blockchain currencies may provide consumers and merchants the benefits of the decentralized blockchain while still maintaining security of account information and provide a strong defense against fraud and theft."
The USPTO published a separate Mastercard patent application late last month for an anonymous blockchain transaction system. It is notable, however, that the two publications relate to blockchain privacy and consumer protection.
Cryptocurrency: Both Decentralized and Centralized?
Although major financial players are joining the blockchain crowd, many are only putting a foot in the door. Senior vice president of Mastercard Labs Justin Pinkham, for example, has said, "We are not using a cryptocurrency, and we are not introducing a new cryptocurrency, because that introduces other challenges – regulatory, legal challenges."
Wells Fargo has also stepped on the crypto brakes, announcing last month that it would no longer allow customers to purchase cryptocurrency using its credit cards. "We're doing this in order to be consistent across the Wells Fargo enterprise due to the multiple risks associated with this volatile investment," the company noted in a statement. Centralized financial services companies such as Wells Fargo are no strangers to snubbing crypto advancement.
It seems, then, that these organizations are intrigued by blockchain technology, but they are not sure whether to take a deeper plunge into the cryptospace. Such ambivalence has brought about a "decentralized but not really" route to blockchain development, which has spurred considerable debate in the tech community.