Charles H. Miller
Multiple times we’ve heard that financial institutions are looking to take advantage of the blockchain technology to improve their operations. We have also heard that many of the world’s biggest banks are testing out the technology to improve things like settlement times and launch novel services.
One of them is J.P. Morgan Chase which system called “Quorum” is designed to toe the line between private and public in the realm of shuffling derivatives and payments. It aims to satisfy regulators who need seamless access to financial goings-on, while at the same time protecting the privacy of parties that don’t wish to reveal their identities nor the details of their transactions to the general public.
Another example comes from Royal Bank of Scotland, which has built a Clearing and Settlement Mechanism (CSM) based on the Ethereum distributed ledger and smart contract platform.
According to a recent Accenture report, the blockchain technology could save the 10 largest banks $8 to $12 billion a year in infrastructure costs — representing up to 30 percent of their total costs in the sector. So it’s not surprising to see Nasdaq looking for its slice of the pie…
Nasdaq’s latest blockchain patent
The global exchange operator has filed a patent for a blockchain-based data matching system. Filed in February by Nasdaq’s market technology division, the application was released by the U.S. Patent and Trademark Office in mid-August, with the submission detailing how the exchange is looking to protect a distributed system that stores and shares transactional data.
The filing details the process of using a blockchain to pair transaction requests, including data of trades and clearing positions. The data matching would then be timestamped and stored in the ledger, in a similar way the Bitcoin network works today (and networks of other cryptocurrencies, for that matter).
Not the first blockchain patent from Nasdaq
This isn’t the first time Nasdaq has filed a patent for a blockchain-enabled system. Earlier this month a similar patent application was released; entitled “Systems and Methods for Securing and Disseminating Time Sensitive Information Using a Blockchain,” it details how a distributed platform could enable information to be transmitted and timestamped, in a way that’s reminiscent of bitcoin transactions on the blockchain.
Once developed, this system would be able to let users submit a time-sensitive document to an authority, who could make edits and share it with a third party for approval. Each modification would be recorded and updated on a distributed ledger, ensuring transparency and preventing any alteration of that data. It would also incorporate cryptography by giving each participant a public identifier and a corresponding private key.
Even before — in October 2016, Nasdaq’s application for “systems and methods of blockchain transaction recordation” was caught at USPTO’s website. It detailed an exchange system comprising digital wallets, an order book and matching engine, with a “closed blockchain” utilized as a record of transactions that is updated in real-time.
Blockchain patents are booming…
Nasdaq is by no means the only company looking to secure patents for blockchain-based technologies. Quite the opposite, with the number of cryptocurrency- and blockchain-related patent applications being submitted and published in the US nearly doubling in 2017, compared to the year before.
Between January and July of 2017, there were 390 patent applications broadly related to blockchain technology at USPTO’s website, up from 204 that were filed during the same period last year.
Five years ago, in 2012, only 71 patents related to blockchain and cryptocurrency technologies were filed with the USPTO; last year, there were 469. So yes, this market is booming…
