IBM Files Patent to Track Worth of Digital Currencies

An additional patent application by a significant corporation is raising eyebrows this week. This time, IBM’s application for an “E-Currency Validation and Authorization Services Platform” proposes a system to “track the life cycle of any person e-currency token” each to detect its use in illegal activities and permit for a a lot more correct estimation of the e-currency’s worth.

The application, created public recently right after being filed in June 2012, says: “The potential to validate and authenticate digital tokens across the lifetime of any specific token will bolster trust and viability, enabling e-currencies to operate across disparate economic systems, fostering less difficult participating alongside sovereign currencies and other non-normal currencies.”

It drew almost instant comparison to Coin Validation, Matt Mellon’s proposed technique of whitelisting “clean” bitcoins that had in no way been involved in illegal activity in order to make it far more palatable to established financial institutions and regulators. The reaction from the bitcoin community to that plan has been almost universally negative, with accusations it would permanently “taint” coins and render them unacceptable for use even soon after changing owners quite a few instances.

Motives

So what is IBM up to? Is it applying to patent its own answer to Coin Validation? Posters in the Bitcoin Talk forum were initially concerned the company may possibly also pose a threat to bitcoin fungibility.

Writing for Let’s Talk Bitcoin, Brian Cohen thinks it is not as negative as that, though it definitely doesn’t reassure with lines like:

“When a user desires to verify a specific e-currency token, the e-currency Validation and Authorization Services Platform 100 could retrieve all transaction information, transactor information, grading data, etc. associated to the e-currency token.”

And:

“The algorithm final results could then indicate no matter whether the specific e-currency token is fraudulent or involved in a fraudulent transaction.”

Cohen stated IBM is interested in tracking digital currency tokens for broader motives, such as the value estimation 1. The organization may as an alternative be inventing a way for all sorts of various digital currencies, from bitcoin to X-Box Reside Points to Zynga Credits, to have a common reference to validate their correct marketplace values against national currencies, enabling their use far a lot more broadly than their initial intended ones or for accounting and taxation purposes.

The platform would do this by means of tracking by figuring out an “average estimated value” for each currency. Proprietary digital currencies could thus break free of their “walled gardens” and be seamlessly transacted with each other. Users could far better understand how precise quoted marketplace values certainly had been, and confirm regardless of whether the token being offered actually exists.

The application does appear to concentrate a lot more on uniting data across various currencies rather than tracking person tokens of one particular in certain, with identification of fraud as a by-item of analyzing patterns in the spending data. It’s important to don’t forget it was filed in 2012, long just before bitcoin began receiving mainstream interest and refers to many other systems without having bitcoin’s characteristic public block chain for validating each and every coin’s existence.

IBM’s interest in the future of finance

Cohen notes also that IBM, though a technologies and consulting firm, has a keen interest in banking and finance. Richard Brown, executive architect of business innovation for banking and monetary markets at IBM UK, is particularly interested in bitcoin and said in the year’s most watched interview on Finextra:

“I think cryptocurrencies — and bitcoin is the initial instance — are going to adjust the globe. But most likely not in the way we expect,” Brown stated, adding that people “haven’t believed through” the critical effects that some of the technologies underpinning cryptocurrencies will have in future years.

He noted that bitcoin is not fully fungible anyway provided its public transaction ledger, and wonders if the technology is better suited to getting primarily an asset register than a supposedly anonymous currency for day-to-day use.

IBM logo image by means of Shutterstock

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IBM Files Patent to Track Worth of Digital Currencies