Banks and bitcoin are odd bedfellows, but they do share some things in common. To its proponents, bitcoin is the future of money, but it still takes “traditional” money to purchase cryptocurrency, and right now, banks control the conduits. If these oligarchs have their way, they’ll also have a controlling stake in the crypto sphere eventually, as the latest patent data shows.
Also read: Bank of America Has Filed More Cryptocurrency Patents Than Any Other Company
Banks Can’t Get Enough of Blockchain
Bankers, together with the rest of the traditional investment world, missed the boat with bitcoin. Save for a few notable exceptions, they didn’t believe the internet funny money peddled by anarchists and cypherpunks would catch on. At first, they were right. But then, following a few false starts, it did. Big time. Now, the banking sector and Wall Street at large can’t get enough of bitcoin, whether it’s launching futures trading desks, acquiring exchanges (such as the Goldman Sachs-affiliated Circle takeover of Poloniex), or even launching their own blockchains.
Financial Companies Have Filed 150 Cryptocurrency Patents
As news.Bitcoin.com reported two weeks ago, banks are among the most prolific filers of cryptocurrency patents, with Bank of America leading the charge. This suggests a couple of things. Firstly, that major banks quietly admire bitcoin and the blockchain that powers it. And secondly that they may have dropped the ball with bitcoin, but are determined to make up for lost time. Their ethos now seems to be “If you can’t beat them, join them”. Of course, just because Bank of America is merrily filing cryptocurrency patents doesn’t mean it’s about to launch its own $BOA coin.
Bitcoin Patent Report has compiled a list of companies within the banking sector that have been prolific on the cryptocurrency front. Aside from Bank of America, which heads the list, there are some other intriguing entrants that make the top 10. All are multinationals; Toronto-Dominion Bank has 85,000 employees for example, and Fidelity another 45,000. These are the sort of institutions with the means to assign a project team to blockchain and throw some money at it “just in case”. Should they succeed in creating the next cutting-edge consensus algorithm, or devise a blockchain with insanely high throughput, the bank – thanks to the patent applied – will profit. And if nothing comes of the venture, well, it’s a drop in the bucket to them.
The Actual Number of Banking Patents Is Higher Still
While official figures show around 150 cryptocurrency patents to have been filed by major financial institutions, the actual figure is likely to be two or three times higher. Patent applications are generally not published until 18 months from when they were first filed, and much of the explosive growth and investment in all things crypto has occurred within this period. In reality, the number of patents filed by the banking industry could be closer to 500. Paypal, which can be loosely considered a like-for-like competitor with cryptocurrency, is a notable entry on the list, with 11 patents to its name. It recently filed a patent for an “expedited cryptocurrency transaction system”.
The internet of the future is one in which everything is online and interconnected. The wall separating traditional finance and cryptocurrency has already gone from stout to paper-thin as innovators from both sides have hopped the divide, blurring the lines between what’s crypto and what’s fiat. Throw in the rise of of the Internet of Things, whose devices may end up on quasi-blockchains that share certain characteristics with bitcoin, and there’s a flurry of innovation. It’s no surprise that banks are trying to position themselves at the heart of it, not least to future proof themselves.
In recent weeks, Goldman Sachs, Bank of America, and JP Morgan have all cited the threat posed by cryptocurrencies in their annual filings to the SEC. While bitcoin isn’t about to replace the SWIFT banking system anytime soon, cryptocurrencies present a new economic system. Given the disruptive potential of blockchain technology and the cryptocurrencies associated with it, it’s no wonder that major banks are quietly securing a stake. Patent data is just one of several indicators that show the giants of the financial system are taking cryptocurrency very seriously.
Do you think major banks are trying to gain a foothold in the cryptocurrency world, or are they simply testing the water at this stage? Let us know in the comments section below.
Images courtesy of Shutterstock, and Bitcoin Patent Report.
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