Financial services companies are investing heavily in the blockchain. This distributed ledger technology could dramatically lower fund-transfer times, bolster security, and slash operating costs by as much as $20 billion annually. Several financial services players have applied to patent the blockchain’s financial applications. The race for a patent could ignite the next big battle over technology standards—and who owns them.
At a glance
- Best known for enabling the digital currency bitcoin, the blockchain can guarantee the source of every transaction and eliminate the need for a central clearinghouse to act as a third party to financial dealings.
- The blockchain could also eliminate the need for reconciliation, a costly and time-consuming process.
- By patenting blockchain applications, financial services companies can create market exclusivity over trading platforms, generate licensing revenues, or mitigate the risk of being sued for using the technology.
- But it isn’t yet clear that the courts will grant patents on computer-implemented techniques for eliminating settlement risk.