Insight

The race to patent the blockchain

September 2016
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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.

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