While cryptocurrency traders continue to patiently wait for the “golden grail”, i.e. an announcement by Amazon it will begin accepting cryptos as valid payment, other online vendors are starting to make quiet moves. Case in point: on March 1, PayPal filed a patent application for an “expedited virtual currency transaction system“, first flagged by Bitcoin.
Here is how Paypal explains the patent:
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.
The last time it was reported that Paypal filed a patent application related to cryptocurrencies was back in mid-2016 when it showed plans for a modular payment module that accepted bitcoin, litecoin and dogecoin.
According to Bitcoin.com, the patent filing “reveals that Paypal might be considering expanding its exposure to the cryptocurrency ecosystem with a new system for speedy transactions.”
We shouldn’t however expect a Paypal Lightning Network or anything close to that any time soon. There is currently a global race to file patents for everything crypto or “blockchain” related and the company might just be strengthening its portfolio for future patent battles.
The Paypal application explains that the need for this proposed system for cryptocurrencies is due to the time delay or latency period between the initialization of the transaction and the point at which the transaction has been confirmed. It gives as an example waiting for ten minutes or more for a bitcoin conformation, which they indicate hurts the user experience, putting it at a disadvantage over seemingly instant choices such as fiat credit card payments.
“In many transaction situations, a 10 minute wait time will be too long for payers and/or payees, and those payers and/or payees will instead choose to perform the transaction using traditional payment methods rather than virtual currency. Issues like this have slowed the adoption of virtual currencies despite their advantages. Thus, there is a need for an expedited virtual currency transaction system,” explains Paypal
In any case, this system could potentially speed up bitcoin BTCUSD transactions while remaining anonymous.
News of the patent spiked Paypal stock to session highs, after starting the day at session lows after the WSJ reported that Amazon was preparing its own branded checking account. YTD PayPal stock has soared 84%.
Having traded largely flat on the day, cryptocurrencies have seen a bid in recent trading as the news of the patent has spread.
Needless to say, formal acceptance of cryptocurrencies by one or more online merchants and intermediaries has long been seen as the catalyst that would send the price of cryptos significantly higher as it would be a harbinger of far broader adoption, and – finally – actual usage.