
Paypal Patent Application: Expedited Virtual Currency Transaction System - lrvick
http://appft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&u=/netahtml/PTO/search-adv.html&r=1&p=1&f=G&l=50&d=PG01&S1=20180060860.PGNR.&OS=dn/20180060860&RS=DN/20180060860
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bitcoinpriorart
Bitcoin transactions support multiple inputs and multiple outputs
(transactions involving multiple input and multiple output "accounts").

For example, Satoshi Nakamoto would need to use multiple accounts as inputs
for any single transaction greater than 50 BTC. Those accounts were created
prior to the development of the Hierarchical Deterministic Wallet spec (BIP32)
[0]. From reading only the abstract cross-posted here, it sounds like the
linked patent filling from 2016 is describing something very similar to the
"Per-office balances: m/iH" use case described in BIP32 [1]; which is indeed
prior art from 2012 [0].

With Bitcoin HD Wallets, there is no distinction between a private key and an
account. With an HD Wallet, there is a private parent key and there are
private child keys which are derived from the private parent key. Each private
child key is a distinct "account". Multiple Bitcoin wallet softwares support
the 2012 BIP32 HD Wallet spec.

[0]
[https://github.com/bitcoin/bips/blob/master/bip-0032.mediawi...](https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki)

[1]
[https://github.com/bitcoin/bips/blob/master/bip-0032.mediawi...](https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki#Peroffice_balances_misubHsub)

~~~
jacques_chester
You can file paperwork to tell the examiner that you think you have found
prior art. Their searches are typically scoped to existing patents.

~~~
bitcoinpriorart
That would require one to read the patent, which could be used as evidence of
willful infringement.

If someone else could read it and file a prior art brief/notification - if
appropriate - that'd be helpful.

~~~
jacques_chester
I think you're getting into a bit of bush lawyering here.

Saying "oh but your honour, I know _of_ it but I didn't actually _read_ it"
won't carry much water if it ever came to trial. If nothing else it would
evidence an intent to ... willfully infringe.

Of course, I am not a lawyer, and clearly neither are you. Neither of us is
giving legal advice.

~~~
bitcoinpriorart
re: "Supreme Court Update: New Standard for Willful Patent Infringement and
Enhanced Damages Under 35 U.S.C. §284" (2016 "Halo")
[https://www.omm.com/resources/alerts-and-
publications/alerts...](https://www.omm.com/resources/alerts-and-
publications/alerts/supreme-court-update-new-standard-for-willful-patent-
infringement-and-enhanced-damages/)

> Though the Court’s unanimous opinion gives district courts wider latitude to
> apply enhanced damages under the abuse-of-discretion standard, a concurrence
> by Justice Breyer, joined by Justices Kennedy and Alito, suggests at least
> two judicial limitations to that discretion: (1) mere knowledge of the
> patent is insufficient to support enhanced damages; and (2) “enhanced
> damages may not serve to compensate patentees for infringement-related costs
> or litigation expenses.”

There should be no IP reason to stop using Bitcoin HD Wallets for handling
multiple Bitcoin accounts due to the linked patent filing because Bitcoin HD
Wallets existed four (4) years prior to what seems to be described in the
patent abstract copied to this thread.

~~~
jacques_chester
Yes, the same link was at the top of my google search too. My conclusions were
that (1) it's not cut-and-dried and (2) I am not a patent lawyer and I don't
think it's wise to pretend I am.

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tyingq
Urgh. PayPal is the definition of stagnant. As a merchant, the experience
hasn't changed over a decade. I have over a dozen workarounds for their bad
interfaces for refunds, invoices, chargebacks, tax reporting, etc, user
experiences.

I'm not clear on why they move so slow.

To be fair, across that broad range, nobody else is doing better than them. It
just seems like given their position, I'd see more innovation. For example,
what’s their response to Stripe? They seem to be on their laurels.

~~~
rising-sky

      > For example, what’s their response to Stripe?
    

Acquired Braintree [https://www.usatoday.com/story/tech/2013/09/26/paypal-
braint...](https://www.usatoday.com/story/tech/2013/09/26/paypal-braintree-
acquisition/2874891/)

~~~
tyingq
Sure, but compare Braintree related HN posts to Stripe related HN posts.
Something is missing.

Edit: Guess my feel that HN posts might be correlated to innovation is off? As
far as I can tell, Stripe is kicking Braintree’s ass. PayPal has good market
share as a whole, because it is a second form of payment. Ignore that and look
at basic CC payments only, and Stripe is clearly beating Braintree in market
share. Basically...what did PayPal net from this acquisition?

~~~
toomuchtodo
HN posts are no measure of profitability or market share. Loud does not equal
better.

~~~
tyingq
So, how do the two do compare in market share? That is, specifically vs the
Braintree product. Is this accurate? [https://www.datanyze.com/market-
share/payment-processing/bra...](https://www.datanyze.com/market-
share/payment-processing/braintree-vs-stripe/)

Edit: Get the charge volume point, but 15% of top sites versus less than 1%
seems to indicate something. Also, websites added/dropped going negative for
Braintree. That can’t be a good thing.

~~~
toomuchtodo
You’d want to measure based on charge volume, not sites using each service.

My understanding is Braintree is cheaper when you get big enough.

Edit: it doesn’t cost you anything to accept Stripe on your site. Would you
figure Optimizely revenue from all of its free plan users they just purged?
You would not.

~~~
jjeaff
Why charge volume? Seems like since the fees are the same, number of
integrations would be a better indicator of ease of use.

~~~
toomuchtodo
Ease of use doesn’t mean profit. Volume and margins do. That's _all that
matters_. Reddit is easy to use and makes zero profit.

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wufufufu
Copy-and-pasted the abstract: "Expedited virtual currency transactions are
provided by identifying a first user primary wallet associated with a virtual
currency and including a first user primary wallet private key. First user
secondary wallets are created that each include a respective first user
secondary wallet private key, and a respective virtual currency transaction is
performed using the first user primary wallet private key to transfer
predefined amounts of the virtual currency from the first user primary wallet
to each of the first user secondary wallets such that first user secondary
wallets are provided with different predefined amounts of the virtual
currency. Subsequently, an instruction is received to transfer a payment
amount to a second user, and the second user is allocated a subset of the
first user secondary wallet private keys included in respective first user
secondary wallets that are associated with predefined amounts of the virtual
currency that equal the payment amount."

It sounds like a way of PayPal holding in escrow. This doesn't solve
transaction speed except for example repeat transactions (known amount long
beforehand). You need a new wallet per every transaction, also?

~~~
eximius
It sounds like they say 'create 100 accounts with 1 coin in it', then when you
want to send, say, 23 coins, you give the recipient the _private keys_ to 23
of those accounts.

Which 1) only works if you trust the sender or 2) immediately transfer the
funds out in which case you're still rate limited by the root chain.

~~~
Rodyland
> or 2) immediately transfer the funds out in which case you're still rate
> limited by the root chain.

That's in there.

> 12\. The method of claim 11, further comprising: performing, by the first
> user device, a respective virtual currency transaction using each of the
> plurality of decrypted third user secondary wallet private keys to transfer
> the association of predefined amounts of the virtual currency associated
> with respective third user secondary wallets to the first user primary
> wallet.

So I'm not sure how this is supposed to "expedite" anything.

~~~
eximius
It isn't completely irredeemable in a different context. Such as if the
network supported expedited operations for things. Imagine if Ethereum had a
built-in or special smart contract that was a wallet contract. It has an owner
that is just some address (another contract or desktop wallet). If Ethereum
expedited changing ownership (where ownership changes are signed messages of
the current owner so there is no trust involved), then the idea works.

Edit: wait, no, that shouldn't be much faster, if at all. Still need to get it
in a block and, IIRC, Ethereum is account based so this is basically how
transfers already work, just using arithmetic...

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lettergram
Wait, so is the patent literally for just transferring wallets with currency
in them?

~~~
Rodyland
Boiled down, it appears so.

I only read the claims, however.

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ziofill
My god, that is one of the most unclear abstracts I've ever read.

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I_am_tiberius
Sad the US doesn't do anything against patents or at least software patents. I
don't think patents do any good in respect to the development of mankind.

~~~
ggg9990
Most modern pharmaceuticals would not exist without patents.

~~~
mayneack
Why do you say that? Just because most modern pharmaceuticals were created
with patents, doesn't mean that they wouldn't exist without patents.

~~~
ggg9990
Because trade secrets are virtually impossible in non-biologic drugs, the
entire funding ecosystem around pharmaceuticals is driven by patents.

~~~
mayneack
5 minutes of googling suggests that Penicillin was not patented and the mass
production was later patented by the USDA (not some private pharma company).
The entire modern funding ecosystem being patent based just means it's the
most profitable business model, not that it's the only way to produce
pharmaceuticals.

[https://en.wikipedia.org/wiki/Penicillin#Mass_production](https://en.wikipedia.org/wiki/Penicillin#Mass_production)

[https://patents.google.com/patent/US2442141](https://patents.google.com/patent/US2442141)

~~~
ggg9990
Of course it’s not the only way to produce pharmaceuticals, as pharmaceuticals
are thousands of years old. But without patents the number of new drugs
pharmaceuticals over the last 50 years would be probably 1-5% of it actually
was.

~~~
tobltobs
Maybe we would have less but better pharmaceuticals, because it would be
easier to improve the existing ones.

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shmerl
Why should this be patentable?

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zeeshanm
This is from 2016 and original authors are no longer at PayPal..

~~~
jacques_chester
Patents typically take several years to be examined.

Source: mine took 4 years, including various rounds of asking for re-
examination.

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jcranmer
The title here is clickbaity and misleading.

Patents are hard to read, and very easy to believe (especially for lay people)
that they claim far more than they actually do. What you need to do is ignore
everything but the claims. I am by no means an expert (I'm still somewhat
confused as how relevant dependent claims are, for example), but the starting
point is still easy.

Reading the first claim, the nexus of the claim is that it's a virtual
currency system were you send money from wallet A to wallet B by routing it
through distinct subwallets. There also seems to be an element that the
subwallets are effectively fixed-size wallets (e.g., each subwallet represents
a different coin as physical currency would have), but I would not bank a
legal case on that. The other independent claims are effectively repetitions
of this idea.

So, at best, this could be construed as a patent on tumblers, and definitely
nothing wider-reaching than that. Even the claim that it would cover tumblers
is somewhat stretching it, I think.

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Scoundreller
Has anyone done the math on how much losing ~100% of their Ebay business will
cost them?

~~~
Basketb926
Ebay was (and is until mid 2020) 13% of Paypal volume
[https://www.marketwatch.com/story/paypal-just-how-bad-is-
the...](https://www.marketwatch.com/story/paypal-just-how-bad-is-the-ebay-
breakup-2018-02-01)

------
asdsa5325
(2016)

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gruez
what's the point of this when there's clearly prior art[1] by almost a decade?
to patent-troll and stifle competition? i doubt it would work for them; it'll
only take 1 bitcoin millionaire/billionaire philanthropist (see pineapple
fund) to shut them town.

[1] [https://bitcoin.org/bitcoin.pdf](https://bitcoin.org/bitcoin.pdf)

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aviv
To appease shareholders.

~~~
Scoundreller
I'm surprised it took this long for an innovative digital payments company to
think about innovating digital payments.

