9 ms·

Paypal Patent Application: Expedited Virtual Currency Transaction System

134 points by lrvick 9y ago

gruez 9y ago
what's the point of this when there's clearly prior art[1] by almost a decade? to patent-troll and stifle competition? i doubt it would work for them; it'll only take 1 bitcoin millionaire/billionaire philanthropist (see pineapple fund) to shut them town. [1] https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
- aviv 9y ago
  To appease shareholders.
  - Scoundreller 9y ago
    I'm surprised it took this long for an innovative digital payments company to think about innovating digital payments.
- austincheney 9y ago
  This isn't a patent of bitcoin. It is an attempt to patent a new transaction scheme. Something similar to block-chain but with different mechanisms. They even mention in the application that virtual currencies already exist as prior art.
wufufufu 9y ago
Copy-and-pasted the abstract: "Expedited virtual currency transactions are provided by identifying a first user primary wallet associated with a virtual currency and including a first user primary wallet private key. First user secondary wallets are created that each include a respective first user secondary wallet private key, and a respective virtual currency transaction is performed using the first user primary wallet private key to transfer predefined amounts of the virtual currency from the first user primary wallet to each of the first user secondary wallets such that first user secondary wallets are provided with different predefined amounts of the virtual currency. Subsequently, an instruction is received to transfer a payment amount to a second user, and the second user is allocated a subset of the first user secondary wallet private keys included in respective first user secondary wallets that are associated with predefined amounts of the virtual currency that equal the payment amount." It sounds like a way of PayPal holding in escrow. This doesn't solve transaction speed except for example repeat transactions (known amount long beforehand). You need a new wallet per every transaction, also?
- eximius 9y ago
  It sounds like they say 'create 100 accounts with 1 coin in it', then when you want to send, say, 23 coins, you give the recipient the private keys to 23 of those accounts. Which 1) only works if you trust the sender or 2) immediately transfer the funds out in which case you're still rate limited by the root chain.
  - Rodyland 9y ago
    > or 2) immediately transfer the funds out in which case you're still rate limited by the root chain. That's in there. > 12. The method of claim 11, further comprising: performing, by the first user device, a respective virtual currency transaction using each of the plurality of decrypted third user secondary wallet private keys to transfer the association of predefined amounts of the virtual currency associated with respective third user secondary wallets to the first user primary wallet. So I'm not sure how this is supposed to "expedite" anything.
    - eximius 9y ago
      It isn't completely irredeemable in a different context. Such as if the network supported expedited operations for things. Imagine if Ethereum had a built-in or special smart contract that was a wallet contract. It has an owner that is just some address (another contract or desktop wallet). If Ethereum expedited changing ownership (where ownership changes are signed messages of the current owner so there is no trust involved), then the idea works. Edit: wait, no, that shouldn't be much faster, if at all. Still need to get it in a block and, IIRC, Ethereum is account based so this is basically how transfers already work, just using arithmetic...
- bitcoinpriorart 9y ago
  AFAIU, Ripple handles escrow without transaction fees for multiple transactions (2016 "SusPay"); and maintains the transaction history within the distributed ledger: https://ripple.com/build/escrow/ https://ripple.com/build/escrow/ I included links to Bitcoin BIP32 Hierarchical Deterministic Wallets (2012) and a description in another thread here. Is this HD Wallets with different terminology? Are they talking about transferring wallets keys instead of balances? If so, do they update the AML information with the exchange? You should never share your private key(s).
Scoundreller 9y ago
Has anyone done the math on how much losing ~100% of their Ebay business will cost them?
- nkkollaw 9y ago
  Mh? Why
- Basketb926 9y ago
  Ebay was (and is until mid 2020) 13% of Paypal volume https://www.marketwatch.com/story/paypal-just-how-bad-is-the-ebay-breakup-2018-02-01 https://www.marketwatch.com/story/paypal-just-how-bad-is-the...
- themango 9y ago
  it'll cost them the opportunity to support Amazon, Alibaba, and other bigger and better markets than eBay first class moving forward :O
shmerl 9y ago
Why should this be patentable?
zeeshanm 9y ago
This is from 2016 and original authors are no longer at PayPal..
- jacques_chester 9y ago
  Patents typically take several years to be examined. Source: mine took 4 years, including various rounds of asking for re-examination.
- tomhoward 9y ago
  The document is dated March 1, 2018. Originally filed in 2016, yes, but it seems to be current.
tyingq 9y ago
Urgh. PayPal is the definition of stagnant. As a merchant, the experience hasn't changed over a decade. I have over a dozen workarounds for their bad interfaces for refunds, invoices, chargebacks, tax reporting, etc, user experiences. I'm not clear on why they move so slow. To be fair, across that broad range, nobody else is doing better than them. It just seems like given their position, I'd see more innovation. For example, what’s their response to Stripe? They seem to be on their laurels.
- rising-sky 9y ago
  > For example, what’s their response to Stripe? Acquired Braintree https://www.usatoday.com/story/tech/2013/09/26/paypal-braintree-acquisition/2874891/ https://www.usatoday.com/story/tech/2013/09/26/paypal-braint...
  - tyingq 9y ago
    Sure, but compare Braintree related HN posts to Stripe related HN posts. Something is missing. Edit: Guess my feel that HN posts might be correlated to innovation is off? As far as I can tell, Stripe is kicking Braintree’s ass. PayPal has good market share as a whole, because it is a second form of payment. Ignore that and look at basic CC payments only, and Stripe is clearly beating Braintree in market share. Basically...what did PayPal net from this acquisition?
    - toomuchtodo 9y ago
      HN posts are no measure of profitability or market share. Loud does not equal better.
      - tyingq 9y ago
        So, how do the two do compare in market share? That is, specifically vs the Braintree product. Is this accurate? https://www.datanyze.com/market-share/payment-processing/braintree-vs-stripe/ https://www.datanyze.com/market-share/payment-processing/bra... Edit: Get the charge volume point, but 15% of top sites versus less than 1% seems to indicate something. Also, websites added/dropped going negative for Braintree. That can’t be a good thing.
asdsa5325 9y ago
(2016)
lettergram 9y ago
Wait, so is the patent literally for just transferring wallets with currency in them?
- Rodyland 9y ago
  Boiled down, it appears so. I only read the claims, however.
bitcoinpriorart 9y ago
Bitcoin transactions support multiple inputs and multiple outputs (transactions involving multiple input and multiple output "accounts"). For example, Satoshi Nakamoto would need to use multiple accounts as inputs for any single transaction greater than 50 BTC. Those accounts were created prior to the development of the Hierarchical Deterministic Wallet spec (BIP32) [0]. From reading only the abstract cross-posted here, it sounds like the linked patent filling from 2016 is describing something very similar to the "Per-office balances: m/iH" use case described in BIP32 [1]; which is indeed prior art from 2012 [0]. With Bitcoin HD Wallets, there is no distinction between a private key and an account. With an HD Wallet, there is a private parent key and there are private child keys which are derived from the private parent key. Each private child key is a distinct "account". Multiple Bitcoin wallet softwares support the 2012 BIP32 HD Wallet spec. [0] https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki https://github.com/bitcoin/bips/blob/master/bip-0032.mediawi... [1] https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki#Peroffice_balances_misubHsub https://github.com/bitcoin/bips/blob/master/bip-0032.mediawi...
- jacques_chester 9y ago
  You can file paperwork to tell the examiner that you think you have found prior art. Their searches are typically scoped to existing patents.
  - bitcoinpriorart 9y ago
    That would require one to read the patent, which could be used as evidence of willful infringement. If someone else could read it and file a prior art brief/notification - if appropriate - that'd be helpful.
    - jacques_chester 9y ago
      I think you're getting into a bit of bush lawyering here. Saying "oh but your honour, I know of it but I didn't actually read it" won't carry much water if it ever came to trial. If nothing else it would evidence an intent to ... willfully infringe. Of course, I am not a lawyer, and clearly neither are you. Neither of us is giving legal advice.
I_am_tiberius 9y ago
Sad the US doesn't do anything against patents or at least software patents. I don't think patents do any good in respect to the development of mankind.
- EggsOnToast 9y ago
  Those are both really broad statements. Developing innovative software costs money as does developing an innovative product or technology. The point of patents isn't to incentivize implementation it's to incentivize innovation.
  - gt_ 9y ago
    Whether OP peanut it or not, patents “incentivize” innovation with a terribly simplistic model of what that involves. The difference between “innovation” and “implementation” is like the difference between a business and it’s business plan. The motivation to regulate it is obvious but the results remain difficult to defend in light of the associated problems introduced.
    - EggsOnToast 9y ago
      I don't agree. I think that while it can be difficult to defend every instance of a patent or a particular implementation of patent law, this doesn't mean that every patent is bad or that the concept of patents is bad and needs to be outright abandoned which is what the OP was discussing. America's patent system may not be perfect but this doesn't mean it's outright unproductive. This holds especially true when evaluated based on raw innovation. America's tech sector speaks for itself but is far from unique, America's pharmaceutical industry also comes to mind. Although widely criticized, and rightly so, the American industry produces nearly a third of the world's new molecular entities.
      - slyfocks 9y ago
        Patents are far from the only factor affecting innovation, yet you seem to conclude that patents are good based on level of innovation in the US. A logically similar argument (“fallacy of the single cause”) would be: Hawaii has a relatively low rate of gun violence yet their gun ownership is high, ergo gun ownership must be fine. Of course some patents are good, but as market concentration increases in the US, IP has become abused by entrenched oligopolistic corporations. Most recent reputable studies find that the US patent system has probably been a net negative on innovation of late [1]. [1] https://www.economist.com/node/21660559 https://www.economist.com/node/21660559
ziofill 9y ago
My god, that is one of the most unclear abstracts I've ever read.
jcranmer 9y ago
The title here is clickbaity and misleading. Patents are hard to read, and very easy to believe (especially for lay people) that they claim far more than they actually do. What you need to do is ignore everything but the claims. I am by no means an expert (I'm still somewhat confused as how relevant dependent claims are, for example), but the starting point is still easy. Reading the first claim, the nexus of the claim is that it's a virtual currency system were you send money from wallet A to wallet B by routing it through distinct subwallets. There also seems to be an element that the subwallets are effectively fixed-size wallets (e.g., each subwallet represents a different coin as physical currency would have), but I would not bank a legal case on that. The other independent claims are effectively repetitions of this idea. So, at best, this could be construed as a patent on tumblers, and definitely nothing wider-reaching than that. Even the claim that it would cover tumblers is somewhat stretching it, I think.

134 points by lrvick 9y ago

what's the point of this when there's clearly prior art[1] by almost a decade? to patent-troll and stifle competition? i doubt it would work for them; it'll only take 1 bitcoin millionaire/billionaire philanthropist (see pineapple fund) to shut them town. [1] https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf

aviv 9y ago
To appease shareholders.
- Scoundreller 9y ago
  I'm surprised it took this long for an innovative digital payments company to think about innovating digital payments.
austincheney 9y ago
This isn't a patent of bitcoin. It is an attempt to patent a new transaction scheme. Something similar to block-chain but with different mechanisms. They even mention in the application that virtual currencies already exist as prior art.

wufufufu 9y ago

Copy-and-pasted the abstract: "Expedited virtual currency transactions are provided by identifying a first user primary wallet associated with a virtual currency and including a first user primary wallet private key. First user secondary wallets are created that each include a respective first user secondary wallet private key, and a respective virtual currency transaction is performed using the first user primary wallet private key to transfer predefined amounts of the virtual currency from the first user primary wallet to each of the first user secondary wallets such that first user secondary wallets are provided with different predefined amounts of the virtual currency. Subsequently, an instruction is received to transfer a payment amount to a second user, and the second user is allocated a subset of the first user secondary wallet private keys included in respective first user secondary wallets that are associated with predefined amounts of the virtual currency that equal the payment amount." It sounds like a way of PayPal holding in escrow. This doesn't solve transaction speed except for example repeat transactions (known amount long beforehand). You need a new wallet per every transaction, also?

eximius 9y ago
It sounds like they say 'create 100 accounts with 1 coin in it', then when you want to send, say, 23 coins, you give the recipient the private keys to 23 of those accounts. Which 1) only works if you trust the sender or 2) immediately transfer the funds out in which case you're still rate limited by the root chain.
- Rodyland 9y ago
  > or 2) immediately transfer the funds out in which case you're still rate limited by the root chain. That's in there. > 12. The method of claim 11, further comprising: performing, by the first user device, a respective virtual currency transaction using each of the plurality of decrypted third user secondary wallet private keys to transfer the association of predefined amounts of the virtual currency associated with respective third user secondary wallets to the first user primary wallet. So I'm not sure how this is supposed to "expedite" anything.
  - eximius 9y ago
    It isn't completely irredeemable in a different context. Such as if the network supported expedited operations for things. Imagine if Ethereum had a built-in or special smart contract that was a wallet contract. It has an owner that is just some address (another contract or desktop wallet). If Ethereum expedited changing ownership (where ownership changes are signed messages of the current owner so there is no trust involved), then the idea works. Edit: wait, no, that shouldn't be much faster, if at all. Still need to get it in a block and, IIRC, Ethereum is account based so this is basically how transfers already work, just using arithmetic...
bitcoinpriorart 9y ago
AFAIU, Ripple handles escrow without transaction fees for multiple transactions (2016 "SusPay"); and maintains the transaction history within the distributed ledger: https://ripple.com/build/escrow/ https://ripple.com/build/escrow/ I included links to Bitcoin BIP32 Hierarchical Deterministic Wallets (2012) and a description in another thread here. Is this HD Wallets with different terminology? Are they talking about transferring wallets keys instead of balances? If so, do they update the AML information with the exchange? You should never share your private key(s).

Scoundreller 9y ago

Has anyone done the math on how much losing ~100% of their Ebay business will cost them?

nkkollaw 9y ago
Mh? Why
Basketb926 9y ago
Ebay was (and is until mid 2020) 13% of Paypal volume https://www.marketwatch.com/story/paypal-just-how-bad-is-the-ebay-breakup-2018-02-01 https://www.marketwatch.com/story/paypal-just-how-bad-is-the...
themango 9y ago
it'll cost them the opportunity to support Amazon, Alibaba, and other bigger and better markets than eBay first class moving forward :O

shmerl 9y ago

Why should this be patentable?

zeeshanm 9y ago

This is from 2016 and original authors are no longer at PayPal..

jacques_chester 9y ago
Patents typically take several years to be examined. Source: mine took 4 years, including various rounds of asking for re-examination.
tomhoward 9y ago
The document is dated March 1, 2018. Originally filed in 2016, yes, but it seems to be current.

tyingq 9y ago

Urgh. PayPal is the definition of stagnant. As a merchant, the experience hasn't changed over a decade. I have over a dozen workarounds for their bad interfaces for refunds, invoices, chargebacks, tax reporting, etc, user experiences. I'm not clear on why they move so slow. To be fair, across that broad range, nobody else is doing better than them. It just seems like given their position, I'd see more innovation. For example, what’s their response to Stripe? They seem to be on their laurels.

rising-sky 9y ago
> For example, what’s their response to Stripe? Acquired Braintree https://www.usatoday.com/story/tech/2013/09/26/paypal-braintree-acquisition/2874891/ https://www.usatoday.com/story/tech/2013/09/26/paypal-braint...
- tyingq 9y ago
  Sure, but compare Braintree related HN posts to Stripe related HN posts. Something is missing. Edit: Guess my feel that HN posts might be correlated to innovation is off? As far as I can tell, Stripe is kicking Braintree’s ass. PayPal has good market share as a whole, because it is a second form of payment. Ignore that and look at basic CC payments only, and Stripe is clearly beating Braintree in market share. Basically...what did PayPal net from this acquisition?
  - toomuchtodo 9y ago
    HN posts are no measure of profitability or market share. Loud does not equal better.
    - tyingq 9y ago
      So, how do the two do compare in market share? That is, specifically vs the Braintree product. Is this accurate? https://www.datanyze.com/market-share/payment-processing/braintree-vs-stripe/ https://www.datanyze.com/market-share/payment-processing/bra... Edit: Get the charge volume point, but 15% of top sites versus less than 1% seems to indicate something. Also, websites added/dropped going negative for Braintree. That can’t be a good thing.

asdsa5325 9y ago

(2016)

lettergram 9y ago

Wait, so is the patent literally for just transferring wallets with currency in them?

Rodyland 9y ago
Boiled down, it appears so. I only read the claims, however.

bitcoinpriorart 9y ago

Bitcoin transactions support multiple inputs and multiple outputs (transactions involving multiple input and multiple output "accounts"). For example, Satoshi Nakamoto would need to use multiple accounts as inputs for any single transaction greater than 50 BTC. Those accounts were created prior to the development of the Hierarchical Deterministic Wallet spec (BIP32) [0]. From reading only the abstract cross-posted here, it sounds like the linked patent filling from 2016 is describing something very similar to the "Per-office balances: m/iH" use case described in BIP32 [1]; which is indeed prior art from 2012 [0]. With Bitcoin HD Wallets, there is no distinction between a private key and an account. With an HD Wallet, there is a private parent key and there are private child keys which are derived from the private parent key. Each private child key is a distinct "account". Multiple Bitcoin wallet softwares support the 2012 BIP32 HD Wallet spec. [0] https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki https://github.com/bitcoin/bips/blob/master/bip-0032.mediawi... [1] https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki#Peroffice_balances_misubHsub https://github.com/bitcoin/bips/blob/master/bip-0032.mediawi...

jacques_chester 9y ago
You can file paperwork to tell the examiner that you think you have found prior art. Their searches are typically scoped to existing patents.
- bitcoinpriorart 9y ago
  That would require one to read the patent, which could be used as evidence of willful infringement. If someone else could read it and file a prior art brief/notification - if appropriate - that'd be helpful.
  - jacques_chester 9y ago
    I think you're getting into a bit of bush lawyering here. Saying "oh but your honour, I know of it but I didn't actually read it" won't carry much water if it ever came to trial. If nothing else it would evidence an intent to ... willfully infringe. Of course, I am not a lawyer, and clearly neither are you. Neither of us is giving legal advice.

I_am_tiberius 9y ago

Sad the US doesn't do anything against patents or at least software patents. I don't think patents do any good in respect to the development of mankind.

EggsOnToast 9y ago
Those are both really broad statements. Developing innovative software costs money as does developing an innovative product or technology. The point of patents isn't to incentivize implementation it's to incentivize innovation.
- gt_ 9y ago
  Whether OP peanut it or not, patents “incentivize” innovation with a terribly simplistic model of what that involves. The difference between “innovation” and “implementation” is like the difference between a business and it’s business plan. The motivation to regulate it is obvious but the results remain difficult to defend in light of the associated problems introduced.
  - EggsOnToast 9y ago
    I don't agree. I think that while it can be difficult to defend every instance of a patent or a particular implementation of patent law, this doesn't mean that every patent is bad or that the concept of patents is bad and needs to be outright abandoned which is what the OP was discussing. America's patent system may not be perfect but this doesn't mean it's outright unproductive. This holds especially true when evaluated based on raw innovation. America's tech sector speaks for itself but is far from unique, America's pharmaceutical industry also comes to mind. Although widely criticized, and rightly so, the American industry produces nearly a third of the world's new molecular entities.
    - slyfocks 9y ago
      Patents are far from the only factor affecting innovation, yet you seem to conclude that patents are good based on level of innovation in the US. A logically similar argument (“fallacy of the single cause”) would be: Hawaii has a relatively low rate of gun violence yet their gun ownership is high, ergo gun ownership must be fine. Of course some patents are good, but as market concentration increases in the US, IP has become abused by entrenched oligopolistic corporations. Most recent reputable studies find that the US patent system has probably been a net negative on innovation of late [1]. [1] https://www.economist.com/node/21660559 https://www.economist.com/node/21660559

ziofill 9y ago

My god, that is one of the most unclear abstracts I've ever read.

jcranmer 9y ago

The title here is clickbaity and misleading. Patents are hard to read, and very easy to believe (especially for lay people) that they claim far more than they actually do. What you need to do is ignore everything but the claims. I am by no means an expert (I'm still somewhat confused as how relevant dependent claims are, for example), but the starting point is still easy. Reading the first claim, the nexus of the claim is that it's a virtual currency system were you send money from wallet A to wallet B by routing it through distinct subwallets. There also seems to be an element that the subwallets are effectively fixed-size wallets (e.g., each subwallet represents a different coin as physical currency would have), but I would not bank a legal case on that. The other independent claims are effectively repetitions of this idea. So, at best, this could be construed as a patent on tumblers, and definitely nothing wider-reaching than that. Even the claim that it would cover tumblers is somewhat stretching it, I think.