According to the release from the US Patent and Trademark Office, MasterCard has filed for the patent which is supposed to make blockchain-based transactions anonymous.
This is not the first filing from this financial business giant. Interestingly, earlier this year, the company also filed for a patent for cryptocurrency fractional reserves banking, which was a bit peculiar as Bitcoin (BTC) came to be as a form of resistance towards the traditional financial system based on the same mechanism MasterCard is trying to patent.
However, with this new filing, MasterCard is, obviously repeating the feature some of the blockchain services in the market have for years. But let’s see what the official document says.
More details on the patent
Since we don’t want to misinterpret something, we are going to quote what the official document describes to be the mechanism of achieving anonymity on the blockchain:
“The blockchain node may receive the request and may process the transaction to transfer the specific amount from the processing server’s blockchain wallet to that of the recipient device. In some embodiments, the processing server may notify the sender device and/or the recipient device of the transfer, which may also include the providing of a transaction record identifier for the second transaction.
As a result, the sender may transfer a specific amount of digital currency to the recipient with increased anonymity, as the blockchain may reflect only that the sender sent currency to the processing server and that the recipient received currency from the processing server. When using the processing server across multiple transactions, and with multiple entities using the processing server, the true source or destination for any transaction is obscured to the point of being impossible to identify. If used for each transaction, a nefarious actor looking at the transactions for the sender 104 will only see transfers to and from the processing server, thus revealing no information about the sender’s spending habits, thus protecting the sender’s anonymity.”
This is an almost exact description of coin mixing and has been in the blockchain industry for quite a while. To simplify the matter, a sender inputs the address where the specified amount of coins need to be sent, and the protocol obscures the origin of the transaction by tumbling it between wallets before finally sending it to the recipient.
The process is sometimes also called coin tumbling or even coin blending, but it all comes down to the same basis, hiding the original source of the transaction to make it anonymous.
Patenting open source technology
Bitcoin, like the majority of blockchain-based projects in the market, is based on an open source code publicly displayed on the internet, without any patents. As such, the technology can be copied and used as anybody wishes.
In the blockchain industry, a project without publicly displayed code would be considered as not being trustworthy, and would most probably be regarded as suspicious. However, this practice opened up an area where big players can freely copy the existing technology and claim it for their own.
Even more so because the blockchain leaders don’t show any willingness to challenge these filings officially, and government officials who are deciding on patent filings probably don’t have enough knowledge to realize that something was invented years ago.
Therefore, we have the example of the Bank of America, which has already filed for more than 20 patents connected to the development of the blockchain technology, with at least one of them highly resembling the solution which exists for quite a while.
Whose fault is this?
It is understandable that founders of the biggest blockchain development ecosystems are unwilling to patent their open source technology as the core postulate of the blockchain movement is that the technology should be usable by anybody. Moreover, imagine how many patents would the Ethereum Foundation have if they went to patent every bit of new technology they’ve developed, including smart contracts.
Not patenting your own ideas and projects is one thing, but failing to challenge someone else patenting your open source technology is another. Since we all look up to these big players of the open source distributed ledger technology to solve at least some problems of the world, we should also look up to them to protect the technological revolution of the 21st century.
Otherwise, we could all end up using Bank of America’s cold storage devices and overpaying for MasterCard’s anonymous blockchain transactions.