JPMorgan files patent for Bitcoin-style payment system - Would enable anonymous payments over internet...
December 10, 2013 6:19 pm
JPMorgan files patent for Bitcoin-style payment system
By Tracy Alloway in New York
JPMorgan Chase has filed a US patent application for a
computerised payment system that resembles some aspects of Bitcoin, the
controversial virtual currency.
Like Bitcoin, JPMorgan’s proposed system would allow
people to make anonymous, electronic payments over the internet, without having
to reveal their name or account numbers or pay a fee, according to the patent
application.
The application put a spotlight on the behind-the-scenes
battle being waged between the biggest banks, credit card operators and
companies such as Google, Apple and PayPal – are all keen to grab a slice of
the rapidly expanding business of providing mobile and internet payments as
more people shift to online buying.
At the same time, traditional finance companies have had
to contend with new types of virtual currencies, which some people view as
viable alternative payment systems that could one day challenge the biggest
banks and credit cards.
JPMorgan said in its patent application – which dates
back to 1999 but was recently updated – that the new payment system would
compete with debit and credit cards as the predominant way of making online
transactions.
But some see the bank’s proposed payments technology as
borrowing features from Bitcoin, to date the most prominent of the new crop of
virtual currencies.
The price of Bitcoin has soared to more than $1,240 this
year as investors have piled in to the fast-appreciating crypto-currency.
JPMorgan’s proposed system involves creating “virtual
cash” that would sit in an online wallet, reminiscent of the computer files
that hold Bitcoins on behalf of their users.
The JPMorgan system would also create a public record of
transactions made using the technology – a feature that would appear to mirror
Bitcoin’s use of “blockchain”, a massive block of code stored across a
peer-to-peer network of computers that acts as a public ledger of all Bitcoin
transactions.
While the bank does not name Bitcoin or any other virtual
currencies in its patent application, it does hint at “emerging efforts” to
challenge the dominance of credit card technology.
“While new internet payment mechanisms have been rapidly
emerging, consumers and merchants have been happily conducting a growing volume
of commerce using basic credit card functionality,” JPMorgan said in the
application.
“None of the emerging efforts to date have gotten more
than a toehold in the market place and momentum continues to build in favour of
credit cards.”
Critics of Bitcoin added that JPMorgan’s move also
highlighted the vulnerability of the new virtual currency to imitations.
Already, new types of virtual currencies have emerged that attempt to improve
on Bitcoin’s perceived weaknesses.
A person familiar with the original JPMorgan patent said
that it had “discussed ideas about different way that payments could evolve in
the future.” The notion of providing anonymous payments was first inserted in
2003 and continued to be considered internally.
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