- PayPal filed a patent to speed up cryptocurrency payments tech.
- Bitcoin expert claims this tech already exists.
PayPal Inc.: PayPal, one of the top payment gateways, has filed a patent to speed up crypto transaction times by removing the verification time of payments. However, Bitcoin developers argues that this has already been made possible through existing tech in the cryptocurrency realm.
In a bid to optimize the process of settling crypto payments between sellers and buyers, there was a report on March 5, 2018, that PayPal Inc. filed a patent with the US Patent and Trademark Office (USPTO) for a tech that is supposed to speed up crypto payments through the use of secondary wallets.
According to the patent, the secondary wallets would enable buyers and sellers to transferred their unique private keys behind the scenes, in order to prevent every transaction from being shown on the public Blockchain and included in blocks. The patent further emphasized that the current system of transactions verification by including payments in blocks have heavily limited the potential of digital currencies like Bitcoin. The patent read:
“In order to be sure that the Bitcoin transaction will ultimately result in a transfer of Bitcoins to the payee, the payee must wait until the mining process confirms the transaction before transferring goods and/or services to the payer. 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.”
Nevertheless, a Bitcoin developer and applied cryptography consultant, Peter Todd, said that PayPal is only trying to patent a technology that is already existing in the cryptocurrency industry, initially developed by Opendime.
— Peter Todd (@peterktodd) March 5, 2018
He claimed the tech was created in 2016 by a former Bitcoin marketplace Coinkite. Opendime is a hardware Bitcoin wallet with multi-signature bank-grade security, which allows users to transfer Bitcoin with internal private keys, with the idea of allowing users to make use of Bitcoin like fiat money – US dollar.
The patented tech of both PayPal and Opedime is similar in that private keys are transferred behind the scenes off-chain, in an instantaneous manner. And this tech encourages users to transfer an entire wallet or private key associated with a predefined amount of a digital currency, as the patent explains:
“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.”
If this tech is implemented on a large commercial scale, it could allow crypto payments to be processed between merchants and buyers instantly and off-chain, eliminating large transaction fees and most importantly, long verification periods. And this could allow dealers to process payments for users without the hours-long verification periods.
However, Owen Williams, the tech-focused podcast host revealed the findings of GDPR last week, which revealed that PayPal Inc. shared customer’s sensitive financial data with more than 600 entities.
More so, the centralization of private keys and crypto payments could lead to vulnerabilities and data selling unless PayPal Inc. can utilize non-custodial wallets and allow users to be in full control of their private keys throughout the entire process.
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