The second largest banking institution in the United States, Bank of America, has been granted a patent for a cryptocurrency risk detection system.
According to the United States Patent department, the patent was granted today and includes provisions for a system that is capable of calculating the risk of a cryptocurrency transaction between a customer and a third party, and assigning it a score.
The Bank of America state in the patent that; “enterprises may handle a large number of financial transactions on a daily basis. As technology advances, financial transactions involving cryptocurrency have become more common. For some enterprises, it may be desirable to calculate the risk for performing a cryptocurrency transaction.”
“This invention relates generally to cryptocurrency transaction, and more specifically, to a cryptocurrency risk detection system,” reads the patent.
The patent details a number of different embodiments of the proposed systems that all appear to be a comprehensive way of ensuring that cryptocurrency transactions are more transparent, reliable, and lower risk for all involved.
The patent details how the processor will receive a request from the client who wishes to perform a particular cryptocurrency transaction. The processor is also able to receive information from the blockchain related to the transaction, as well as the value of the cryptocurrency involved. Based on this information, the processor is able to then calculate a risk score for performing the crypto transaction, based in part on the information provided by the blockchain, and the amount of cryptocurrency in the transaction.
The patent details that one or more processors can be used in the system and that it is capable of ascertaining other important information relating to the transaction such as the age of the cryptocurrency unit, whether involved parties have public keys, as well as the transaction history associated with the key. The risk factor can also be calculated using data from the transaction history associated with any party involved in the transaction, and the IP address.
Once a risk score has been ascertained, the processor will decide whether the transaction is approved before communicating this to the customer and the third party. The system is also able to determine whether the score associated with the transaction indicates any suspicious activity by the third party, and can then communicate this to the customer as well.
But this is not the first cryptocurrency patent filed by the Bank of America Corporation.
On 30 October 2018 the Bank was awarded a patent for a “hardened storage device” that is able to store cryptographic keys such as those used for blockchain platforms.
“In specific embodiments of the system, the authentication routine is conducted as part of a cryptocurrency transaction, a blockchain transaction or the like,” the patent states.
According to the filing, as computers that traditionally store cryptographic keys are connected to the internet, they are “continuously susceptible to risks”. As a result, the Bank of America created a “secure means for storing private cryptography keys” in order to reduce the risk.
Then a few days later in November, they were awarded another patent that detailed how enterprise-level institutions would be able to store cryptocurrency assets held by their clients. This hinges on the idea that as adoption of crypto increases, customers may want institutions to safekeep them, much in the way that a traditional bank does with fiat currency.
The patent explains: “As technology advances, financial transactions involving cryptocurrency have become more common. For some enterprises, it may be desirable to aggregate cryptocurrency deposited by customers in an enterprise account.”
In addition to this, the patent details how businesses may want to use a single account that is capable of storing cryptocurrencies in a secure and reliable manner. The proposed system is set to include a processor and memory that is capable of storing a private key which is associated with a customers cryptocurrency holdings. This system would be able to not just store the assets, but to facilitate transactions as and when authorised.
The Bank of America is the second largest banking institution in the United States and services around 10.7% of all banking deposits. It offers financial services in the areas of commercial banking, wealth management, and investment banking and had a revenue of $91.24 billion in 2018. Ranked as number 24 on the 2018 Fortune 500, it is considered as one of the biggest and most influential financial institutions in the world.
The bank has filed over 23 patents for blockchain and cryptocurrency related patents since 2014, making it one of the most active banks in the world when it comes to developing blockchain and crypto systems.
For such an entity to take such an interest in blockchain and cryptocurrency is a huge boost for the industry. A number of prolific bankers have come out over the last few years to decry cryptocurrency as a scam or trend that will soon die out- an opinion it seems that is not shared by the Bank of America.
With this number of patents in such a short time, it seems that Bank of America is most definitely up to something. The question is ‘what’ and when will we get to know more?