Bank of America Files for Cryptocurrency Storage Patent 🚨 This article is 6 years old...
Bank of America Files for Cryptocurrency Storage Patent
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Updated: Apr. 22, 2021 at 12:05 pm UTC
Photo by Filip Bunkens on Unsplash
Bank of America, the second-largest U.S. bank by total assets, has filed a patent with the U.S. Patent and Trademark Office, which was published Aug. 23.
The development is comparable to patents awarded to, or applied by, several multinational corporations, such as IBM, Wells Fargo and Intuit.
BoA’s Push into Crypto
Filed last April, the patent, titled “Block Chain Encryption Tags,” details a system that identifies the first entered data values to a block, subsequently denoting a “creator tag” to such datasets and assigning them to a blockchain on a first-processed basis.
The patent indicates its application function as recording and storing digital transactions–mainly for enterprises and large-scale businesses. It also details a data security mechanism for blockchain networks by linking encrypted data units for a specific blockchain.
Unlike most blockchain patents that focus on a sophisticated software process, BoA’s patent calls for a hardware processor that encrypts all data before being validated on a block.
Interestingly, the system is a “reproduced version” of a cryptocurrency patent filed in 2014 by James Ronca, titled “Cryptocurrency Online Vault Storage System.”
The ‘Bankization’ of Cryptocurrencies
BoA acknowledged that the use of cryptocurrencies among enterprises is steadily increasing and corporations may soon “desire to store cryptocurrencies safely.”
In this regard, it is impractical to safe keep hundreds of thousands of individual wallets containing digital assets from an equivalent number of customers. Instead, the patent mechanism allows the bank to store all client assets in a single vault, courtesy of the point-of-data entry encryption.
Perhaps the most voiced issue in a cryptocurrency transaction, customers and retailers remain unaware of transactions unless they are confirmed on the network, taking several minutes in the case of Bitcoin payments.
However, BoA’s patent includes a “messaging” application that notifies users of a payment’s success or unsuccess by calculating the validations from a “number of miners” and comparing it with a prerequisite of minimum validations. If all conditions are met, the parties are notified, and if not, they are notified of an “unsuccessful transaction” result.
Real-Time Payment Settlements
The device also features cryptocurrency exchange rates that allow the conversion of fiat-to-crypto or crypto-to-crypto in real time, mitigating the risk of enterprises losing fiat value on cryptocurrencies due to the asset class’ inherent price volatility.
What’s more, a “cryptocurrency credit” embodiment, which allows enterprises to “credit” the accounts of customers who wish to fulfill a transaction, does not possess the necessary funds at the time of payment.
The system also features a “risk profile” score of every user, collated by tracking their crypto-payments, repayments and transactions.
Bank Admits Crypto-Competition
The elaborate patent is not the first for BoA. The bank currently has more than 50 blockchain and cryptocurrency-based patents in its arsenal, beating out technology rival IBM in this regard.
While the bank remains skeptical toward cryptocurrencies, it was awarded a digital asset exchange patent last December. However, in 2018, the bank told U.S. authorities that the burgeoning crypto sector provided significant competition to the industry, stating its inability to adapt with “services and products according to industry standards and consumer preference” may impact its overall business.
