Bank Of America Awarded Patent For Enterprise-Grade Crypto Custody
According to the official document published on November 13, 2018, by the US Patent and Trademark Office (USPTO), Bank of America (BoA) has been awarded yet another crypto-related patent. This time, it is about the crypto deposit storage system for enterprises.
Simply put, the patent represents a mechanism very similar to how advanced cryptocurrency exchanges handle individual deposits and aggregate them in cold storage.
BoA first filed for the patent on June 16, 2014, and stated at the time that the cryptocurrency transactions have become more common with the technological advancement the financial market is passing through.
The memory and processor-based system
The official document describes the system as memory and processor-based solution, where memory stores a customer account correlated with a customer and a business account in correlation with the business.
The processor is said to be coupled with the memory, and it processes requests for crypto deposits, which are then stored in the system’s memory.
The filing also outlines the security procedure, by which the system generates two “vault keys” in accordance with two different hash functions as parts of the unique private key used to keep funds safe.
The first vault key is used to devise a half of the private key, while the second is used to obfuscate the private key while producing its second half.
Those two vault keys are stored in separate data centers to ensure the extra level of security.
Talking further about the patent, the official filing mentioned some use cases of such system.
Besides the usual deposit and withdrawal functions, the system is said to be able to simplify the acquisition and cryptocurrency trading as clients wouldn’t need to conduct such operation at third-party exchanges themselves, also reducing trading fees in the process.
It is unknown how the system is able to do be more cost efficient. The document mentions that their solution, in order to exchange cryptocurrencies, will communicate with some existing third-party service providers, naming OKCoin and Bitstamp as possibilities.
Bank of America left no stone unturned as they also mentioned crypto-fiat conversions, stating that their now patented system is capable of doing so in the most efficient way, determining the optimal exchange rate through the plurality of exchange rates.
The filing also states that, despite being legally patented as such, the system can possibly be subject to changes, variations, alterations, transformations, and modifications which “fall within the scope of the appended claims.”
This sounds familiar
Since the BoA’s newly patented system holds crypto trading capability, and for trading to happen, cryptocurrency private key has to be “taken out of the cold storage,” and used on the network, it sounds like a similar kind of mechanism could already be in use by some existing cryptocurrency trading platforms.
Some exchanges tend to keep their customers’ idle funds in cold wallets, taking them out if users start making trade orders.
The only difference between these mechanisms could be that Bank of America is wielding much more financial resources to enhance the security of their system and that it is meant to be used by enterprises.
However, until somebody challenges these patents, Bank of America will be legally considered to be the original inventor of these systems.
Be that as it may, if it becomes the bank’s every-day service, this system could be the very legal custody solution the US cryptocurrency market needs for wider adoption of digital assets.
This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your own research and/or consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.