A non-utility patent filed by Bank of America has Ripple fans in high spirits today. The patent, which is dubbed “Real-time net settlement by distributed ledger system,” directly references Ripple’s digital ledger technology in multiple illustrations.
At no point throughout the abstract or supporting documents does Bank of America explain or much cite Ripple or XRP. The XRP token, which is the basis for Ripple’s family of blockchain products, is mentioned nowhere.
The patent cites “nostro accounts” – a term used to describe how banks secure money for each other – and points out that they are expensive. With the inspiration of blockchain technology, Bank of America wants to try something new, writing:
“[A] need for a flexible and cost effective accounting treatment and system for implementing the same are needed.”
The patent’s methodology may be described as “using Ripple without Ripple.” The fact that this method is patented brings to light an interesting conversation: would this patent, in effect, drive other banks to need Ripple?
For all intents and purposes, BofA’s patent #US2019/0172059 AI describes a bank with a blockchain wallet listening for payments from another bank with a blockchain wallet.
With blockchain, parties have an independent source of records. In traditional “nostro/vostro” accounting schemes, both a bank holding a deposit and a bank making a deposit would need to maintain records.
The described “embodiment” will also have identification properties built-in. This would limit its ability to function with public-facing, pseudonymous blockchains like Bitcoin.
Blockchain technology brings with it a suite of tools that might help large-scale banking, such as multi-signature keys.
Bank of America has not issued a statement on its approach to digital ledger technology or Ripple Labs. The bank has been quietly exploring the blockchain industry for years.