PayPal has filed a patent to speed up cryptocurrency transaction times by eliminating the verification time of payments. Bitcoin expert argues that this is already made possible through existing technologies in the cryptocurrency industry.
On March 5, 2018, Cointelegraph reported that PayPal filed a patent with the US Patent and Trademark Office (USPTO) for a technology that is supposed to speed up cryptocurrency payments through the utilization of secondary wallets.
Essentially, PayPal seeks to optimize the process of settling cryptocurrency payments between merchants and buyers, on retail or e-commerce platforms. The secondary wallets of users, as described in the official patent, would allow the unique private keys of buyers and sellers to be transferred behind the scenes, to prevent every transaction from being included in blocks and broadcasted to the public Blockchain.
The patent heavily emphasized that the system of verifying transactions by including payments in blocks have limited the potential of cryptocurrencies like Bitcoin.
“In order to be sure that the Bitcoin transaction will ultimately result in a transfer of Bitcoins to the payee, the payee must wait until the mining process confirms the transaction before transferring goods and/or services to the payer. In many transaction situations, a 10 minute wait time will be too long for payers and/or payees, and those payers and/or payees will instead choose to perform the transaction using traditional payment methods rather than virtual currency. Issues like this have slowed the adoption of virtual currencies despite their advantages,” the patent read.
Bitcoin Developer Peter Todd responds
Peter Todd, a Bitcoin developer and applied cryptography consultant, stated that PayPal is trying to patent a technology that already exists in the cryptocurrency industry, developed by Opendime.
— Peter Todd (@peterktodd) March 5, 2018
Created in 2016 by a former Bitcoin marketplace Coinkite, Opendime is a hardware Bitcoin wallet with multi-signature bank-grade security. It allows users to transfer Bitcoin with internal private keys, with the vision of enabling users to utilize Bitcoin like fiat money, such as the US dollar.
Opendime is structurally different to other hardware wallets like Trezor and Ledger, which can be reused. Opendime is a USB stick that can only be used once, like a piggy-bank. The USB stick must be destroyed to use the funds stored inside, allowing it to be used as cash.
The patented technology of PayPal and Opedime is similar in that private keys are swapped behind the scenes off-chain, in an instantaneous manner. As the Opendime team explains, “since we are putting private keys into a physical form you can trust, you can simply hand around Opendime units to move amounts around. There are no pre-defined Bitcoin amounts with Opendime either. Store as much or as little as needed.” […]