Bitcoin and patents were never natural friends in the first place. With the launch of the Blockchain Defensive Patent License, however, the long-running debate in the industry may finally come to an end. Before we move ahead in our article, register yourself visit website, and learn all there is about the safest ways to trade in the oil network
Bitcoin is often seen as the conclusion of the decades-old cypherpunk movement, founded on primarily anarchist and libertarian principles about the freedom of information and the right to privacy. On the other hand, the original Bitcoin programmed was made available as free and open-source software (FOSS), and it continues to function today under the MIT License, which is well-known for its permissiveness. Many people believe that Bitcoin’s open, permissionless ethos has contributed to the success that it has achieved today.
A large part of this philosophy is opposed to international patent law. However, while Free and Open-Source Software (FOSS) is essentially about free sharing, patents give people or businesses exclusive property rights or ownership of innovation. For this reason, many of the cypherpunks and libertarians who were early adopters of Bitcoin are opposed to the concept of patents in its most fundamental form. Depending on their perspective, they tend to see patents as immoral, state-granted monopolies at the worst or as obstacles to innovation at best.
A business blog post on the subject claimed that “permissionless innovation” is “fundamental to the Bitcoin ethos,” according to James Murdock, vice president of corporate development and general counsel at Blockstream. The statement continues, “We are strong believers that for the promise of Bitcoin and similar technologies to be fully realized, they must be supported by a global platform that is free for any entrepreneur to utilize without hesitation.”
The Different Kinds of Bitcoin Applications and Their Controversies
The MIT License protects all main Bitcoin software implementations, but this democratized notion of intellectual property protection does not extend to all apps and businesses developed on top of or around Bitcoin. Based on their findings, Patexia Research discovered that the number of patents linked to Bitcoin and blockchain technology had increased considerably in recent years, from a few dozen in 2015 to several hundred in 2017. Big names such as IBM, Bank of America (BofA), and Mastercard are among the top patent-holding corporations globally.
In addition, many prominent businesses in the sector have been plagued by controversy regarding patents: companies such as Coinbase, BitGo, and Blockstream have all been the target of social media backlash for their patent filings. However, regardless of one’s political beliefs, inventors have a compelling incentive to seek patent protection: neglecting to do so puts them at risk of becoming victims of patent trolls. In a blog article, Coinbase CEO Brian Armstrong described how the company works:
I myself would like to live in a world of software patents that did not exist (since I believe they hinder innovation and waste a great deal of time and money), but we must treat them with respect because they do exist. […] In acquiring bitcoin-related patents, our ultimate aim is to keep them out of undesirable actors’ hands, use them defensively to defend Coinbase from patent trolls, and contribute to the continued growth of the bitcoin ecosystem.
The Problem with Miners’ Applications for Patents
Unlike the usual worries about patents that are typically ideological in nature, patents in the mining sector may represent a more real danger. Patents may jeopardize Bitcoin’s decentralized characteristics and, as a result, its security assumptions in this situation. A lottery, although a fair lottery, is often used to characterize bitcoin mining. This is because no organizer takes a cut of the reward money. Considering that miners are competing with one another on razor-thin margins, those who mine with the greatest energy efficiency will outcompete those who mine with more resources. The latter category will need to improve to stay competitive — or else it will be forced to withdraw from the race.
This kind of difference among miners is one of the reasons why patents may be such a danger. If one miner gains a systematic edge over the competition, which is precisely what a patent may provide, all other miners may be forced to withdraw from the race.
The Patent License Solution for Bitcoin Defensive Patent License
Several initiatives have been undertaken in the past to address the issues that patents bring to the Bitcoin business. Coinbase, for example, has pledged to honor intellectual rights. Even though this commitment is not legally enforceable, it implies that the business openly opposes the aggressive exploitation of software patents against entrepreneurs.
