Tag Archives: Goldman Sachs

Bitcoin prices dive: 58 bitcoin facts that will amuse and enlighten

It has been a decade since the appearance of bitcoin, the alternative or cryptocurrency based on a blockchain, a “decentralized” network or shared ledger that facilitates transparency. 

The currency’s pricing gyrations have been nothing short of a roller coaster ride, with bitcoins trading in 2017 as low as $750 and as high as $5,000.

Bitcoin is down from its September 2 high of $5,000 “on speculation,” reports Coindesk, “that the Chinese government is launching a crackdown on [bitcoin] exchanges.” Some others are blaming JP Morgan CEO Jamie Dimon’s scathing attack on bitcoin for the meltdown in the prices seen on September 13.

Business Insider says that as of last September 7 bitcoin is up 355% for 2017 (for the current price, go here).  More recently, it has hit a three-week low, and some believe it appears to be hurtling toward correction at around $3,000.

Hyped & Misunderstood

“No term at present is more hyped or misunderstood than blockchain,” reports FORTUNE. “A blockchain is a kind of ledger, a table that businesses use to track credits and debits… [It is] a definitive record of who owns what, when.“tp

“Properly applied, a blockchain can help assure data integrity, maintain auditable records, and even, in its latest iterations, render financial contracts into programmable software… Even if participants don’t trust one another, they can rely on the shared ledger through the transaction dance of their software.”

Goldman Sachs, Bank of America and MasterCard are among the most frequent recipients of blockchain patents. As reported in IP CloseUp, patent publications and grants are on the rise.

But despite price volatility, or perhaps because of it, bitcoin continues to attract converts. Among those who accept transactions with them are Microsoft, PayPal, Fortune magazine, Intuit, Amazon, Home Depot, Target and more than 100 companies.

Bitcoin is not blockchain, but the currency made possible by a blockchain platform or “shared ledger that underlies it. This is said to allow for transparency without any one party controlling clearing or profiting unfairly.

Bitcoin = Blockchain 1.0

Bitcoin is one manifestation of the blockchain ecosystem. It is an example of what a blockchain can do, but it is just the beginning. Blockchain 1.0, if you will. Industries as diverse as energy, healthcare and law are already using variations on blockchain technology.

The attraction of bitcoin is many-fold. Most important, it is highly private if not totally anonymous and eliminates the cost of middle-man and confusion from lack of transparency. 16.4 million bitcoins have been minted; after 21 million no new coins will be created. Once all coins have been mined value from the system, it has been said, will be derived from transaction fees (kind of like shares of stock).

For a bitcoin primer go here.

For those of you interested in the history of the bitcoin and early blockchain era, the following infographic – “10 Years of the World with Bitcoin – 58 Insane Facts” – from BitcoinPlay will enlighten as well as amuse. Source urls can be found at the bottom of the image.

 

Image source: bitcoinplay.net; bitcoin.com

 

Blockchain patent publications picked up speed in August

An uptick in recent blockchain patent publications may be an indication that the technology is quietly picking up steam, with competing big banks and tech businesses vying for leadership.

“The US Patent and Trademark Office (USPTO) published in late August 2017 nine additional patent applications related to blockchain technology that was filed by Bank of America,” reports The Coin Telegraph, an industry publication.

The patents, which relate to the carrying out and settling transactions within a payment network, were all filed on Feb. 22, 2017, so the process took only seven months. So far, BofA has filed over 30 blockchain technology-related patent applications, including some 18 in 2016.

“The various patents already filed by the bank mainly focused on the whole cryptocurrency exchange and payment process. Among them were the areas of real-time conversion, transaction validation, risk detection, and online and offline storage.

“The other patents involved the use of distributed ledgers to validate the factualness of information and those who handle it, as well as a peer-to-peer payment system that operates on the blockchain.”

In September 2016, the bank partnered with Microsoft for a joint project aimed at developing and testing blockchain applications for trade finance.

“Under the deal,” reports The Coin Telegraph, “the bank will collaborate directly with Microsoft Treasury for the creation of a Blockchain system that can speed up transactions between the partners.The partners have already hinted that they are already testing how the system can facilitate the letter of credit process.”

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Leading cryptocurrency startup Coinbase received in mid-August a patent related to a security system for storing and distributing private keys.

The USPTO approved and published the patent on August 15, reports Econotimes.com. Entitled “Key ceremony of a security system forming part of a host computer for cryptographic transactions’, the patent lists former Coinbase engineers James Hudson and Andrew Alness as inventors, CoinDesk reported. The patent application for “key ceremony” was submitted in 2015. The startup has filed a number of patents related to security of private keys in the past.

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Also last week, the USPTO published the details of Visa’s new patent application. The biggest credit card company’s plans for the digital asset network are quite broad, reports Bitcoin Magazine. However, it might be possible that the company is planning to file a patent for the Visa B2B Connect.

The blockchain enterprise company Chain and Visa announced their new partnership in October 2016, in which the two firms decided to develop “a simple, fast and secure way to process B2B payments globally.” The Visa B2B Connect platform’s pilot is expected to launch in 2017, indicating a connection between the USPTO digital asset network patent and the new B2B solution.

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Coincidence? Maybe. Publication dates cannot be controlled, but they can be managed. A spate of controversial financial transaction patents publishing in mid-August should draw more attention than they would otherwise deserve.

 

Image source: datafloq.com; cointelegraph.com

Will blockchain technology fuel a new patent war or prevent one?

The race is on to gain control of a new technology that has the power to reinvent banking and make transactions and other agreements between parties cheaper, safer and easier to complete.

Like disruptive inventions that preceded it, blockchain has businesses, large and small, jockeying for leadership. This means that patents are likely to play a significant role.

Blockchain is a shared database of transactions and other information, which is open to all and controlled by no one. It also can function as an autonomous semi-private network.

Blockchain began life as the trading infrastructure that permits secure recording of payments for bitcoin, the fledgling crypto-currency. But in the right hands the technology is capable of much more. A blockchain can handle complex transactions, even entire contracts.

IP Windfall?

It is no surprise that competition is building for patents that go beyond bitcoin and cover inventions that support a distributed public ledger. Call it blockchain 2.0. The race among a variety of disparate players is not likely to be a repeat of the smartphone wars, but it does have the potential to create an IP licensing windfall for early movers, leaving some volume users to pay unanticipated royalties.

The shared nature of blockchain (see diagrams below) makes it unlikely that any one or two players will explicitly control the technology. However, that will not prevent some patent holders from trying to profit.

The blockchain is a public database that by-passes money-based payments by recording all transactions screen-shot-2016-03-04-at-42158-pmdigitally. It forms the core of bitcoin and other crypto-currencies by maintaining a decentralized record of all transactions. Proponents say it has the potential to disrupt financial services by making payments and the settling of securities transactions, in particular, far cheaper. Reuters reports that financial institutions alone are expected to invest $1B this year and next in developing blockchain.

Some companies, like IBM, are hoping for a more open system, in the vein of Linux, while others, mostly software developers and some banks data carriers, are looking to have an IP leg up on the competition and to keep the technology at least somewhat proprietary. This would give non-financial and other players a chance to profit from licensing and encourage more investment.

Mysterious Origins

The story of blockchain and its early promotion as the technology underlying bitcoin is fascinating if not mysterious. It appears to start with Craig Wright, who claims to be the pseudonymous creator of bitcoin, Satoshi Nakamoto. Wright, an Australian, recently announced that he has filed 50 blockchain technology and crypto-currency related patents in the UK. Why the UK? That’s another question. And why has Wright announced his applications rather that wait to for them to issue or publish?

Where there are bitcoins and other crypto-currencies, reports, CoinDesk, an industry publication, there are patents, which could be worth far more than the currency if found to be valid and infringed. However, these patents will be difficult to prove valid. The USPTO and most courts (after the Supreme Court’s 2014 decision in Alice) are now taking the position that most software is not inventive, and merely automates previously established inventions.

However, not everyone agrees. Two Hogan Lovells attorneys say that “Viewed as providing an improved computer data structure, [our] proposed bitcoin method claim should be precisely the type of improvement to computer functionality that is still patentable under Alice.”

Blockchain patent applications have generated an unusual amount of publicity. Whether these patents will issue or if they are capable of sustaining validity upon PTAB and district court scrutiny is unclear. Business Insider obtained a copy of the US patent, filed on May 10, for a passcode blockchain that Verizon has apparently been working on for three years.

“There is quite a bit of excitement about having digital rights on a blockchain-type system. It could allow for pay-per-usage, for example, while smart contracts — the contractual clauses that form part of a transaction — could provide automatic payment distributions, according to a Moody’s Investors Service report.

“A blockchain of digital rights for consumer products — music and news articles, among others — could ensure that artists or authors are paid immediately once a consumer reads an article or listens to a song, with funds proportionally distributed as per contractual clauses.”

Goldman Sachs is among the big banks excited about the blockchain. Thirty banks have now signed up to the R3 or R3CEV partnership. R3, based out of New York, is trying to establish industry-wide standards and protocols for using the technology, as well as exploring potential use cases.

Business Insider’s coverage of blockchain is very useful for getting a handle on how it works and may be applied. Go here for a stream of articles with useful diagrams, including the triptych in this post.

Establishing Blockchain Standards

Establishing standards for blockchain will also be difficult.

R3 CEV, a startup working in blockchain which launched in September 2015, reports the Wall Street Journal, named the project Concord for the harmony it hopeblockchains to build among more than 60 banks participating in the project. The consortium originally started with nine multinational banks. The group currently includes Barclays PLC, Goldman Sachs Group Inc., and J.P. Morgan Chase & Co.

“Perhaps the most important difference between Concord and bitcoin and ethereum is the way transactions are recorded. With bitcoin and ethereum, every transaction is recorded, verified and disclosed immediately in their public, distributed ledgers. With Concord, while the transaction is verified via a distributed ledger, it isn’t publicly disclosed. The details are shared only by the parties involved.

“Figuring out the best way to use blockchain-based tools in the financial-services industry has become a hot topic. A number of firms, including Digital Asset Holdings, HyperLedger Project, Ripple, Microsoft’s Azure, and others are all working on products to take advantage of the new technology.”

A number of companies of various types and sizes have filed blockchain or related crypto-currency patents. The emphasis on patent applications, as most people in the IP world know, is more style than substance. CoinDesk reports eight companies filing and Quatrz comments on ten Bank of America’s patent applications publishing on December 17.

Leading patent recipient IBM is taking a more holistic approach to blockchain, integrating it under a recently announced new business unit, Industry Platforms, that includes cloud computing and artificial intelligence, and that will work closely with the financial services and other industries.

Industry Platforms will have company-wide responsibility for blockchain research and development, according to CoinDesk, in addition to helping foster open technology standards with the stated goal of accelerating market adoption. Project-based innovation leveraging open source technology has had great success in avoiding litigation in the core technology generated by these projects.

The new unit represents the next phase in IBM’s blockchain initiative, building on past activities that have resulted in a range of prototypes, and play a leading role in the Linux Foundation-led HyperLedger Project. In parallel and with the support of R3, HyperLedger is the largest and most organized Blockchain initiative.

“Truth Telling” Design

“Blockchain’s design prevents the owner of a currency token from committing fraud by spending it twice,” reports Bloomberg Business Week. “The first spend is recorded for all to see, so no one would ever accept a second spend.

alaindelorme-murmuration03“The truth-telling feature of blockchain makes it enormously useful to banks, which have been among the first to start testing it. Microsoft launched blockchain as a service last year. Smaller companies are building dozens of apps on blockchain, such as one for musicians to track and collect royalties on their works.”

“The poetic vision of a blockchain society is a flock of starlings at dusk: decentralized yet perfectly coordinated. Blockchainers like to show video clips of murmurations—those enormous clouds of birds that pivot and wheel, climb and dive, split and merge with amazing grace. Blockchain, in this vision, could replace gobs of bankers, accountants, and lawyers, as well as escrow accounts, insurance, and everything else that society invented pre-21st century to verify payments and the performance of contracts.”

Benefits for IP Holders 

The promise of blockchain to streamline important, voluminous tasks is uniquely important to IP holders. It could provide an opportunity to copyright and other IP dependent businesses and individuals (patent holders, too) to track and receive incremental payments that in the past were difficult to comprehend; blockchain could serve to minimize disputes in ways that the courts and PTAB have not.

Right now, no one really knows what blockchain has wrought or what it is capable of, but there is a strong feeling that the distributed public ledger technology can be a catalyst for new ways of doing business, and that IP rights will play a role. There are a lot of businesses pulling for blockchain to succeed, and hoping that it will be will be readily shared.

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UPDATE:

A Goldman Sachs patent application, published by the US Patent and Trademark Office (USPTO) on Sept. 8, 2016, was originally filed in March 2015. It outlines a distributed ledger that can process financial transactions in the foreign exchange market, reports Quartz. It’s Goldman’s first blockchain-related patent.

Image source: Goldman Sachs Global Research; businessinsider.com; mnn.com (Alain Delorme)

Wall Street to Patents: "We Love You, Man"

IP Cash is King Right Now –

JP Morgan analyst Paul Coster takes a long look at Acacia Research Corporation (NASDAQ: ACTG), a company that barely survived 2003 that Wall Street currently values at $1.5 billion. He generally likes what he sees.

My look at Coster’s 44-page report in the upcoming IAM magazine, out June 1, regards an equity analyst who specializes in computers and peripherals trying to get his arms around a nascent industry built on uncertainty, lumpy returns and unaccustomed to public scrutiny.

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Wall Street’s love-hate relationship with IP rights is heating up. It remains to be seen whether this is an enduring marriage, momentary fixation or potentially dangerous obsession.

Is public ownership of patent licensing (or patent defense) an oxymoron? While they are unproven business models, there is good reason to believe that public patent companies will enjoy a symbiotic relationship with each other and can serve as an alternative to some high cost litigation.

For better or worse, some of the smartest underwriting money is bullish on the patent business.

By racking up a critical mass of patent settlements and some forward-looking licenses Acacia has caught the attention of mainstream investors. With the help of Barclays Capital (RPX co-underwriter), the company recently raised another $175 million in a stock offering. (Goldman Sachs and Allen & Co are other RPX backers.)

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In an industry that prides itself on the ability to discount almost any type of risk, Wall Street currently finds IP-centric companies such as Microsoft and IBM interesting; those that license patent rights as their primary source of income it finds tantalizing.

The difference is in the financials, especially operating margins, which can be double or higher than those of the average S&P 500 company.

For the JP Morgan report on Acacia, click here. You will have to wait a few weeks for IAM 48 and The Intangible Investor column addressing public ownership of patent licensing.

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Acacia CEO Ryan to Speak to Investors

FYI: Acacia Research Corporation Chairman and CEO, Paul Ryan, will discuss the growth of Acacia’s patent licensing business at the JP Morgan 39th Annual Technology, Media and Telecom Conference being held at the Westin Copley Place in Boston. Ryan’s presentation will take place on Wednesday, May 18, 2011 at 9:20 AM (EDT). It will be webcast live at http://www.acaciaresearchgroup.com/events.htm.

Image source: zonebourse.com-Thomson Reuters

Defensive Patent Acquirer is Going Public

RPX Files S-1 with the SEC

It’s amazing what you can learn, or infer, from a Securities and Exchange Commission S-1 registration statement, which RPX has filed in order to sell $100 million worth of shares to the public.

Lead underwriters Goldman Sachs, Barclays Capital and Allen & Company all are stellar financial advisors and selective about whom they do business with. A good sign.

RPX recorded $10m in profits for first nine months of 2010 on about $65m in revenues, and has 70 clients.

The company estimates that “litigation-related expenses in the patent market totaled tens of billions of dollars in the United States from 2005 to 2010.”

I didn’t have time to go over the registration carefully. However, those of you interested in patent infringement and IP business models might want to take a closer look. S-1 registration disclosure details are often revealing.

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RPX has done quite well over the past 24 months, achieving significant growth and profit. I wish them success. It is unclear how much of the company is being sold at this time. Time will tell to see to what extent the business is scalable and how attractive its model is to investors. Continued performance will help.

Illustration source: SEC.gov

SEC Investigates Goldman Sachs Fraud

The Gold Standard No More?

In a provocative IAM blog, Joff Wild asks will the Goldman Sachs brand be irreparably harmed from the SEC fraud investigation whether it secures a conviction or not? “Will Goldman Sachs pay a long-term reputation price for its current woes?”

There is no way of measuring the precise impact, but the investigation for what may have been systematic fraud would have to affect at least some transactions and clients. The more important question is what will it take for GS to recover?

Reestablishing faith in banking system and financial institutions will go a long way to helping. Investors, regulators and individuals must see that Wall Street is not being held to a different legal standard than Main Street because its members wear white collars or because they are needed to lead the economy back from the financial ruin they may have helped to instigate.

If convicted GS will at some point need to admit its lapse (if that indeed is what is was), expect that some officers will serve jail time and explain what measures are being taken to prevent fraud in the name of profits from recurring. It will also need to hold itself to a standard that exceeds any current legal requirements or future ones being proposed by the Obama administration.

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The best thing that can happen to GS and for banking is for people to see that financial crimes do not go unpunished, and that they are an aberration, not a way of life. For hallowed brands like GS and other intangible assets there is no substitute for reliability and consistency of purpose and message. Brands imply higher quality and endure because good managers make sure they represent real values.

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No aggressive advertising or public relations campaign can repair the damage sustained by a brand if core values are in question.


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