Bank of America's Blockchain Foray: Patent Trolling or Hedging Risks?

Published on by Cointele | Published on

In order to make sense of what the news means for the crypto industry as it currently is, revisiting a long record of BofA's use of blockchain patents is a necessary first step.

Bank of America and blockchain: a complicated relationship.

In brief, Bank of America has long been the global leader in terms of the raw number of registered, unexpired patents that made use of distributed ledger technology, amassing as many as 82 of them as of March 2019.

Speaking at the CB Insights Future of Fintech event in June 2018, she stated that Bank of America's main reason to be active on the patent front is simply hedging potential future risks, rather than the abundance of present use cases, saying, "While we've not found large-scale opportunities, we want to be ahead of it, we want to be prepared."

Michael Wuehler, an ex-BofA employee of 11 years who's had a hand in the company's blockchain research, went even further by tweeting in August 2018 that the bank's blockchain patents were "Meaningless other than making for press releases and public perception of innovation." Come 2019, not much seems to have changed.

For one, as analysts at the nonprofit Gini Foundation have it, the bank is bracing for the upcoming "Blockchain patent war," in which patents will serve to sabotage other blockchain platforms and stall the overall industry's development by the means of endless litigation over emerging solutions.

"Bank of America is not a patent troll. They run a financial services business with varying levels of complexity across divisions and products and like many of the legacy finance institutions, they are constantly monitoring emerging areas. The ability to identify new technologies where patents can potentially serve to protect and create value is the natural progression of any enterprise level business when dealing with a nascent technology. We see this as further mainstream adoption and a positive development for the blockchain space as a whole. That being said, institutional adoption of blockchain technology will inevitably increase competition and for some it will be 'be careful of what you wish for.'".

Iain Wilson, an advisor to NEM Ventures, the venture capital and investments arm of the New Economic Movement blockchain ecosystem, thinks that there are structural reasons behind banks' struggle to find immediate use cases for blockchain tech, which was one of the major issues that BofA's Bessant took with DLT solutions.

Even if BofA and other leading financial institutions are not trying to deliberately stall the development of the blockchain sector, it is still sitting on a massive pile of patents with vague prospects of actual implementation.

According to a fresh report by the media platform IAM, 54% of blockchain patents get registered there are granted, compared to Japan's 17% and the United States' 16%, with China trailing even further behind with just over 1%. At the same time, South Korea accounts for just 4% of global blockchain innovation, while the composite share of China and the U.S. approaches 84%. Ultimately, the inertia inherent to massive established financial markets precludes the kind of brisk patenting to implementation cycle that characterizes a tiny and more agile Korean market.

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