By Sarthak Agrawal
Online payment service provider, PayPal, has filed a new patent application for an expedited virtual currency transaction system with the US Patent and Trademark Office. Currently, there is a global race to file patents in anything related to cryptocurrencies or blockchains and the technology incorporated in cryptocurrency-based transaction systems. Seeing this trend, PayPal seems to be adding the patent to its kitty for future needs and use. The inventors of the new transaction system are Cheng Tian and Sandy Lynn Godsey of San Jose, California, with PayPal Inc. as the applicant of the system proposed by them.
How will the new system work?
The technology described in the patent will work by creating a secondary wallet for each individual user. These secondary wallets will have their own private keys. A transaction will be performed by using the private key of the primary wallet to transfer a defined amount of money to the secondary wallet. When a payment is to be made, the payee will receive a subset of the payers secondary wallet private key along with the cryptocurrency that equals to the predefined amount.
The patent filing indicates that PayPal might be considering the enhancement of its cryptocurrency based payment system. The technology aims at improving the speed of payments made using cryptocurrencies through the PayPal application. However, it is too soon to expect a lightning fast mode of cryptocurrency payments. The last time the company filed a patent related to cryptocurrencies was in 2016 when it revealed its plans to include Bitcoin, Litecoin and Dogecoin in acceptable forms of payment.
Timing it right
PayPal has explained that the need for a new system of payment via cryptocurrencies is due to the amount of time it takes in performing a transaction. Currently, the waiting period between the time at which the transaction has been initiated and the time at which it is confirmed is too long and the system is far from being convenient for users. It takes about ten minutes for a bitcoin payment confirmation which only ruins the user experience for both the payer and the payee. Hence, the cryptocurrency payment method is at a disadvantage in comparison to other faster options such as the credit card payments.
Due to the inconvenience of using cryptocurrency-based methods in making payments, users tend to choose traditional payment methods instead of virtual currency options. These challenges have led to a slow adoption of virtual currencies. Hence, there exists a need for an expedited virtual currency transaction system.
Future prospects
With this move, PayPal hopes to attract more users to its application. With cryptocurrency gaining popularity and cryptocurrency-based transactions becoming more and more important, due to their various advantages such as prevention of theft, removal of middlemen and decentralisation, PayPal feels it is the right time to increase the speed of its own cryptocurrency-based transaction system. If they do not follow up on the trend, there might be a possibility of them being completely eliminated from the race. Their fate could be similar to Nokias after Nokia made the grave error of not incorporating Android into their smartphones.
Post the announcement, PayPal’s share was up by 0.5 percent on Monday. The proposed expedited transaction system could speed up bitcoin transactions, along with its adoption while also maintaining the anonymity of the user.
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