Higher the tower, more fingers are raised. After Bitcoin value grew 10-15 times this year itself, Bitcoin has been under the scanner. We even had Alan Greenspan call it a Bubble. There is a big debate whether Bitcoin is a currency or an investment tool as punters and saving classes are investing due to speculation. Ofcourse Bitcoin is back to $910+ levels today, after the recent crash. Amidst all this, one thing is clear that the current system of currency is being questioned again and again and its being felt that it is inefficient. In a surprising (maybe not for some) JP Morgan Chase bank on December 10th 2013, filed for a patent in the U.S to develop a payment system utilizing “Virtual Cash”.
According to a document on the U.S. Patent & Trademark Office’s website, ““The application is a renewal for intellectual property claims originally filed in 1999 covering a method and system for conducting financial transactions over a payment network.” Similar to Bitcoin, JPMorgan’s proposed system would enable users to make anonymous, electronic payments over the internet, without the requirement of revealing their name or account numbers or pay a fee, according to the patent application.
“It is predicted that credit cards will be the dominant on-line point of sale (POS) payment choice for at least the next five years. While new Internet payment mechanisms have been rapidly emerging, consumers and merchants have been happily conducting a growing volume of commerce using basic credit card functionality,” stated the application.
Some features of the proposed invention:
- JP Morgan says that the invention represents a new paradigm for effectuating electronic payments.
- It makes use of conventional payment infrastructures, existing platforms and presently available web-based technology to enable e-commerce in both physical and virtual marketplaces.
- The concept provides a safe, sound, and secure method that enables consumeers to pay bills, shop on the Internet and pay anyone virtually anywhere. The consumer would not be required to share account details with the payee.
- On the security front, Merchants receive immediate payment confirmation through the Electronic Funds Transfer (EFT) network so they can ship their product with confidence that the payment has already been received.
- The solution further allows for the creation of “web cash”, provides facilities for customer service and record-keeping and enables small dollar financial transactions.
- The structural components to the system would include: a digital Wallet; a Payment Portal Processor; an IPA (Internet Pay Anyone) Account; an Account Reporter; a Virtual Private Lockbox (VPL); the existing EFT networks; and a cash card.
The new system would also create a public record of all transactions made by utilizing the technology. This looks like a feature that mimics Bitcoin’s use of “blockchain”, a massive block of code stored across a peer-to-peer network of computers that acts as a public ledger of all Bitcoin transactions.
However, The patent application which counts 18,126 words does not mention ‘Bitcoin’ anywhere. Rather, it puts their new system against the traditional credit card and rival internet payment systems. “None of the emerging efforts to date have gotten more than a toehold in the market place and momentum continues to build in favor of credit cards,” noted the Bank. The idea of providing anonymous payments was initially brought up in 2003 and continued to be discussed internally according to JP Morgan.
Last week, Bank of America released a report on Bitcoin, where it essentially proclaimed the virtual currency as the ‘next big thing’. Bitcoin value soared to a new high of $1,248 on Nov. 29, 2013. With over 12 Million coins in “circulation,” that meant nearly $15 Bn in Bitcoins were being traded on the Internet — an amount greater than the value of the entire currency stock of countries such as Iceland, Ethiopia, Nepal and 90 other countries, according to 2012 estimates by the CIA’s World Fact Book. Also, a number of new virtual currencies have already emerged that attempt to improve on the weaknesses of Bitcoin.
Does this mean that other banks are also taking virtual currencies seriously now? Are we going to see some more patents, product launches on the same lines?
It has been learned (unconfirmed) that JP Morgan had this patent for several years now and just renewed it. Perhaps it shows the changing times with the Bitcoin fever.
Chiraag Patel is a Senior Reporting Analyst and the Editor of Bitcoin and Virtual Currency channels at Lets Talk Payments. He is an engineer with deep interest in MMORPG, Virtual Banking, Game Currency and Virtual Cash. Chiraag enjoys Reading & Blogging with focus on New Innovation, Technology & Startups in the Payments Space.
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