Goldman Sachs has submitted a patent application focusing on how blockchain could cut out the middle man with transaction costs, claiming that the technology could change the current process.
The patent, “Systems and Methods for Updating a Distributed Ledger-Based on Partial Validations of Transactions”, which was published on September 8 by the U.S. Patent and Trademark Office (USPTO), was initially filed in March 2015, making it Goldman Sach’s first blockchain focused patent.
Since the introduction of bitcoin, banks have slowly been turning their attention to its underlying technology, the blockchain, as a way of processing transactions that are faster and more cost efficient.
Ripple, a blockchain startup, is one company that has partnered up with banks such as Santander and UBS. According to the Goldman Sachs patent, though, there are drawbacks associated with these systems.
The patent said:
These systems suffer from significant disadvantages in terms of privacy, because they maintain balances and transaction records in publicly accessible ledgers that are stored on distributed servers.
This means that if a bank blockchain is transparent, it gives competitors the ability to place opposite trades against each other thus reducing the competitive nature of foreign exchange trading.
By submitting the patent, Goldman Sachs is aiming to combine the advantages of blockchain with technologies that deliver security, privacy, and comply with regulations.
Goldman Sachs isn’t the first bank to apply for a blockchain- or a digital currency-based patent.
At the beginning of the year, Bank of America, was reportedly drafting up another 20 patents. At the end of 2015, Bank of America had previously submitted 10 patent applications, which were published by the USPTO in relation to digital currencies.
It was thought that this provided clues that the bank was looking into creating a digital currency system that worked alongside fiat currency.
In 2015, Coinbase, the bitcoin and ether exchange, is reported to have filed for nine patents, sparking a discussion that the company was attempting to create a monopoly over bitcoin services.
Whether or not Goldman Sachs end up using the patents remains to be seen as the USPTO could essentially reject the applications from the company.
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Last modified: May 21, 2020 10:16 AM UTC