PayPal Has Filed a Patent for a Cryptocurrency Transaction System
The American online payments provider, PayPal, has filed for a patent seeking to expedite the transfer of virtual currencies from one wallet to another. As per records made available at the US Patent and Trademark Office on March 1, 2018, the patent aims to create first user and secondary user wallets and keys for enabling faster transactions and payment settlement across a blockchain.
Approaching Top Speeds: PayPal Transaction Accelerator
The patent application titled ‘Expedited Virtual Currency Transaction System’ aims to enable the instantaneous transfer of cryptocurrencies from one wallet to another. Currently, if a sender has to transfer a certain amount of digital tokens to another wallet, the process can take an average of ten minutes or more.
Whenever a new transaction enters the blockchain, it is verified by all miners on the network. These miners tend to check if there has been a double transaction of the same amount previously. Ultimately, it takes up significant time and resources for all miners to verify a single block containing many such operations.
This patent application filed by Paypal dated August 30, 2016, has San Jose’s Cheng Tian and Sandy Lynn Godsey as inventors. The application explains that it will enable faster cryptocurrency payments by creating a first user primary wallet having a first user primary key.
A first user secondary user wallet is then created that includes a respective secondary wallet private key.
Using this advent, a transaction will be performed by using the private key of the first user primary wallet to transfer digital currency from the primary to the secondary wallet of the first user.
Whenever instructions are given to transfer a certain amount of cryptocurrencies from the first user to the second user, the latter gets access to a subset of the first user secondary wallet’s private keys. These private keys have the amount equivalent to the transaction amount already stored in their respective secondary wallets.
PayPal was founded in 1998 initially as Confinity, a security software service provider for handheld devices and was founded by Max Levchin, Peter Thiel, Luke Nosek and Ken Howery.
Its merger with Elon Musk’s online banking company X.com in March 2000, however, led to the creation of PayPal. It offered several advantages over the traditional banking system as it was much cheaper, faster and efficient to transfer money over the web without having to visit the bank.
Currently, the platform is a medium for individuals as well as businesses to make online financial transactions in fiat currencies.
However, cryptocurrencies today aim to enable real-time payment settlement over blockchains, which could eventually become a potential threat to PayPal’s business model.
It doesn’t come as a surprise then that PayPal is keen to innovate in the field to enable faster payment settlement on their end.
Blockchain technology has already been heralded as the start of finance 2.0 by several financial institutions.
Despite the patent, PayPal co-founder Max Levchin told CNBC that according to him, blockchain technology isn’t going anywhere despite admitting that he was still trying to “figure out” bitcoin and wasn’t sure whether it is a currency or an investment tool.