On October 22, 2015 the United State Patent and Trademark Office published eBay patent applications for 20150302400, “Distributed Crypto Currency Reputation System” and 20150302401, “Distributed Crypto Currency Unauthorized Transfer Monitoring System”.
The reputation application will be discussed in detail below and while controversial, we will offer just an extract of the blacklist application as it does not appear to be a particularly interesting except for who submitted the application.
The applications were filed by eBay, which (at the time) owned PayPal prior to its split. Both applications list Max Metral as the inventor. Metral joined PayPal Mobile when his company Fig Card was acquired by PayPal. Prior to the eBay/PayPal split the vast majority of patent applications were filed under eBay and not PayPal. PayPal patent applications have only recently started to appear at USPTO and the cryptocurrency patent applications have likely been (re)assigned to PayPal.
As detailed in Eric M. Jackson's book “The PayPal Wars,” the online payment company originally had grand plans to liberate oppressed people from their native currencies. Bitcoin seems to now have taken on that role.
In December 2013, it was reported that eBay filed a patent application for programmable money (a.k.a “Gift Token”). It was also in late 2013 that Xapo’s Wences Casares introduced David Marcus, then president of PayPal to the Bitcoin ecosystem as detailed in Nathaniel Popper’s book "Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money.”
In March 2014 it was first reported that eBay filed a patent application, which included a “Bitcoin currency exchanger.” Shortly thereafter in April 2014 the subject cryptocurrency patent applications were submitted to USPTO.
Building a Reputation
“You can't build a reputation on what you are going to do.”
– Henry Ford
Reading patent applications can be a difficult endeavor. The devil is in the details. While the application makes numerous references to “reputation markers”:
“[…] the reputation markers provided in the distributed crypto currency reputation system discussed herein may operate substantially similarly to distributed crypto currencies […].”
There is only a single block reference to a “reputation coin”:
“[…] a payer may transfer electronic coins to a payee and receive products or services in response. If the payee is satisfied with the products or services received, the payer may then transfer all the reputation coins allocated based on that transaction to the payee to indicate that satisfaction. Similarly, if the payee is unsatisfied with the products or services received, the payer may then transfer none, or only some, of the reputation coins allocated based on that transaction to the payee to indicate that dissatisfaction […].”
The application attempts to illustrate the number (i.e. “plurality”) of ways reputation can manifest itself through an exhaustive number of combinations of different concepts utilizing this technology. Basically it appears as though the application tries to conceive of any and every implementation that reputation might be used in tandem to a cryptocurrency (and perhaps in its stead).
In regards to how the “reputation markers” would be created, the application provides a few examples of how they would come into existence (a couple examples below):
“[…] the reputation markers may be created and allocated in an amount that is some percentage of the amount of electronic coins involved in the detected crypto currency transaction […].”
“[…] reputation markers may be allocated for crypto currency transactions in a single type of crypto currency (e.g., Bitcoin), or may be allocated for crypto currency transactions across multiple types of crypto currency (e.g., Bitcoin, Litecoin, etc.) [...].”
However, the application states that if they haven’t detailed a particular iteration of the allocation (issuance?) concept then the idea is quite logically theirs anyway (you can’t make this stuff up):
“[…] While a few examples have been provided, any type of allocation factors may be used in allocating reputation markers based on a crypto currency transaction, and may be selected based on the most logical allocations for crypto currency transactions that will further the goal of accurately reflecting a user's reputation using the reputation markers[…].”
The application also claims a time warp feature that enables issuing markers retroactively:
“[…] because of the nature of crypto currency public ledgers (i.e., that they include every crypto currency transaction conducted in the history of the crypto currency), the distributed crypto currency reputation system may be used to go ‘back in time’ and reward reputation markers to payers and/or payees for previous crypto currency transactions [...].”
Here today, gone tomorrow
PayPal’s patent application also brought to mind Augur’s Rep or Reputation Token used by reporters of events on the Ethereum based decentralized Augur prediction market. Both PayPal and Augur mention how users of their tokens/coins can have their respective tokens/coins revoked by the network under certain conditions:
According to the PayPal application:
“[…] reputation markers may be unallocated, transferred away from, or otherwise made unusable by the user to which they were transferred after a predetermined amount of time […].”
According to Augur, which specifically states that it is “not a Cryptocurrency”:
“[…] the Augur network automatically redistributes Rep from reporters in the minority of reporters to the reporters whose reported outcome was in the majority [...].”
The “Distributed Crypto Currency Unauthorized Transfer Monitoring System” is essentially a blacklist.
From the patent application detail:
“[…] public keys may then become blacklisted such that when a current transaction between a payer and a payee is performed, the payer public key that is associated with the current transaction ay [sic] be sent to the system provider and if the system provider determines that the payer public key is blacklisted (i.e., explicitly stored in the database or associated with a public key that is stored in the database), the current transaction may be stopped and/or the payee may be informed not to proceed with the current transaction. Thus, payers that attempt to spend crypto currencies that they have obtained through unauthorized transfer from a previous owner will be unable to do so with payees participating in the system, reducing the value of any crypto currency obtained through unauthorized transfer […].”
Since it was first reported that “Obama Initiative Spawns Identity Based Bitcoin Greenlist,” there has been much discussion on how blacklist (whitelists, greenlists etc.) would affect the fungibility of bitcoin. CoinValidation was announced immediately after publication of this article and subsequently a front page post on r/Bitcoin “What a landmark legal case from mid-1700s Scotland tells us about the fungibility and the very nature of money-- and why we should care in light of the recent CoinValidation controversy.”
Are the applications patently absurd or do they offer some good (and unique) ideas? Share your thought and comment below.
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