PayPal Files Patent to Improve Cryptocurrency Transaction Times
PayPal has filed a patent for a system designed to improve the speed of cryptocurrency payments.
Documents filed with the US Patent and Trademark Office (USPTO) on March 1 show that the payment processing giant has developed a system through which senders and receivers can swap private keys rather than sending coins over the network through traditional means.
At present, Bitcoin blocks are mined approximately every 10 minutes, meaning that users must wait at least that long for their transactions to be “confirmed” by the network.
From the filing:
“In many transaction situations, a 10 minute wait time will be too long for payers and/or payees, and those payers and/or payees will instead choose to perform the transaction using traditional payment methods rather than virtual currency. Issues like this have slowed the adoption of virtual currencies despite their advantages.”
While many cryptocurrencies have sought to address this concern by shortening block times, users are still subject to higher fees and slower confirmation times when the networks become congested.
Under PayPal’s proposal, the system would automatically create multiple secondary wallets for its users — wallets whose private keys could be aggregated and transferred to match any desired payment amount. This, the patent argues, would “practically eliminate” confirmation times.
The documents state:
“The systems and methods of the present disclosure practically eliminate the amount of time the payee must wait to be sure they will receive a virtual currency payment in a virtual currency transaction by transferring to the payee private keys that are included in virtual currency wallets that are associated with predefined amounts of virtual currency that equal a payment amount identified in the virtual currency transaction.”
That PayPal is expending resources developing systems for cryptocurrency-based transactions is notable, as it indicates that the firm — once a disruptive fintech startup — is now perhaps feeling the forces of disruption itself.
However, PayPal users should not expect that they will be able to create PayPal-branded Bitcoin wallets anytime soon. Many established companies — including Bitcoin-skeptical institutions like Bank of America — have been filing cryptocurrency-related patents for years but have yet to develop them into actual products.