Bitcoin Archives - IPOsgoode /osgoode/iposgoode/tag/bitcoin/ An Authoritive Leader in IP Thu, 09 Feb 2023 17:00:00 +0000 en-CA hourly 1 https://wordpress.org/?v=6.9.4 The future of the crypto industry after the FTX collapse /osgoode/iposgoode/2023/02/09/the-future-of-the-crypto-industry-after-the-ftx-collapse/ Thu, 09 Feb 2023 17:00:00 +0000 https://www.iposgoode.ca/?p=40556 The post The future of the crypto industry after the FTX collapse appeared first on IPOsgoode.

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Amin Hosseini is an IPilogue Writer and an LLM Candidate at Osgoode Hall Law School.


On Friday, November 11, 2022, FTX. Shortly after that, filed for bankruptcy, and a Japanese exchange called Bitfront shut down. FTX is a global, centralized cryptocurrency exchange based in the Bahamas. It enables customers to exchange their digital currencies for other digital currencies or regular money. Sam Bankman-Fried ("SBF”) was the CEO of FTX.

The collapse came when FTX. is the cryptocurrency exchange with the highest daily trading volume of cryptocurrencies globally. On November 9, Binance it would no longer purchase FTX, mentioning reports of mishandled funds and regulatory investigations. Since then, the price of has plunged by more than 90%. The FTX's native token is called . It is generally used as collateral for future positions and to lower trading fees.

According to a report by , on November 2, Alameda Research ("Alameda”), the cryptocurrency trading firm led by SBF, was found to have an unusually high stockpile of FTT. FTX and Alameda's connections may have been more complex than had been previously disclosed, raising the question of whether FTX moved customers’ assets to Alameda. Since Alameda and FTX owned most of the FTTs, the other business would suffer severe financial consequences if one of them is compelled to sell or transfer its FTT holdings.

On November 6, that it would sell its FTT tokens. The value of FTT fell, triggering investors to race to sell their holdings in FTX out of concern that it would collapse like other cryptocurrency corporations. FTX rushed to execute withdrawal requests, but could not pay. As a consequence, FTX filed for bankruptcy.

John J. Ray, the new CEO of FTX, believes such a disaster is due to a lack of supervision and poor record-keeping. He numerous mismanagements leading to the disaster, including concealing misuse of customers' funds through software, using unprotected group emails, and communicating using applications with auto-delete features that restrict access to FTX records.

Platform customers, unsecured creditors, must wait in line to receive whatever assets the court may take from FTX based on priorities established by equitable principles. The bankruptcy has highlighted an $8 billion shortfall. After the fall of FTX, it will be more difficult for crypto exchanges to gain trust.

Industry experts are now predicting a "". The cryptocurrency market has long battled to win over investors and authorities. Investor trust in digital assets has weakened in the fallout of FTX, which will likely lengthen the impending crypto winter.

The FTX collapse underscores the lack of investor fund regulation in cryptocurrency markets. The cryptocurrency industry requires more stringent regulation to be rid the market of manipulation, fraud, mismanagement, cyber security risks, and money laundering. What steps will be taken to address these concerns will remain to be seen.

Further Reading:

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Cyber Horrors: Ransomware and You /osgoode/iposgoode/2021/08/12/cyber-horrors-ransomware-and-you/ Thu, 12 Aug 2021 16:00:34 +0000 https://www.iposgoode.ca/?p=37997 The post Cyber Horrors: Ransomware and You appeared first on IPOsgoode.

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Natalie BravoNatalie Bravo is an IPilogue Writer and a 2L JD Candidate at Osgoode Hall Law School.

Do you ever get weird emails that are poorly-veiled attempts? Strange requests for payments? These phishing attempts are occurring more frequently, but they are just the tip of the ransomware iceberg. Cybersecurity breaches are a serious concern and the ever-evolving technological landscape is an endless playing field for dedicated malicious actors. Widespread breaches exemplify the need to updated software and security policies across all sectors which use online services. With the pandemic and many working from home, these attacks are on the rise. The Canadian Centre for Cybersecurity reported that ransomware is an and

Many Canadians have not heard of , a malicious software (“”) that attacks computers by user files so that malicious actors can request monetary ransom to decrypt or unlock the files. These are typically, though not always, carried out by an unauthorized or unknown transfer of a Users may download and/or open a file that appears legitimate and unknowingly infect the operating system with malware. Accompanying ransom demands are usually requested in the form of Bitcoin due to the presumed anonymity of the transactions. The use of Bitcoin is rampant in these types of attacks – so much so that they have impacted (“K۰”) . Sometimes hackers . In a recent report, McCarthy Tétrault’s Cyber/Data Group estimated that Canadian organizations . Ransomware attacks damaging more than finances as they can disrupt operations and corrupt or destroy sensitive data. During the pandemic, hospitals are of utmost concern. The click of an ad, a visit to a website, or a simple file download could risk your data.

In 2017, a high-profile ransomware attack named devastated various organizations worldwide. The automatically spread throughout networkers and did not require users to open or download any files. It encrypted user files and demanded Bitcoin ransom payments to decrypt them. WannaCry targeted “end of life” or outdated versions of and exploited certain vulnerabilities within the software. Operating systems must frequently be updated to implement security patches that prevent such exploits. However, updates for older computers are usually discontinued as technology progresses. Microsoft quickly released further following the mass attack. The international event was and reported to have impacted more than 200,000 computer systems and caused an estimated hundreds of millions to billions of dollars in damage. The WannaCry attack affected organizations such as factories, telecommunication companies, hospitals, governments, and delivery systems. Years later,

WannaCry was terrifying when it happened, but many more concerning high-profile cybersecurity attacks have occurred within the past year . Just imagine . Some alarming events in the past three months include the following:

  • In May 2021, the largest petroleum pipeline in the United States, Colonial Pipeline is reported to have been hacked via a . The password had access to the company’s internal network and was also unfortunately leaked on the dark web. The hackers utilized the credential to attack and extort Colonial Pipeline. The systems started to shut down and the ransom demanded was $4.4 million in payment. The company stated they had no choice but to
  • In June 2021, one of the largest meat producers in the US, JBS made the difficult decision to pay the $11 million USD ransom in Bitcoin to resume plant operations.
  • On July 4th, 2021, the ‘,’ allegedly conducted by Russian-associated hackers REvil, hit during the US holiday weekend. Kaseya, a software firm, was targeted in the . Supply-chain attacks, in brief terms, involve compromising a trusted supplier therefore sabotaging the distribution system. The Kaseya attack largely affected US businesses, but Canada was also impacted. Between 800 and 1,500 organizations across the globe were impacted and essentially paralyzed. They demanded from affected users/companies and expressed some willingness to .

It is difficult to know what will happen next with technology, computers, and software. It is best to be proactive and cautious. I have compiled some tips, supported by and the , to help keep your data and your employer’s networks safe:

  • Check your computer(s) for updates frequently, and make sure your operating system is still receiving new updates.
  • Back up your data periodically and preferably offline. If you are targeted and your data becomes inaccessible, you will feel so much better knowing you had a back-up or two handy.
  • Make sure you are running a trusted anti-virus program, sometimes they are installed on your computer.
  • Understand how to your data in the event of a breach and practice the recovery methods.
  • Keep your passwords safe and unique - reusing passwords is never a good idea.
  • Familiarize yourself with common types and methods of malware. You can find a handy list .
  • Contact your organization’s IT department whenever you see anything suspicious, just in case.

Stay safe, don’t interact with strange emails, and always update and backup if possible! Feel free to comment below any tips or advice you may have.

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Non-fungible Tokens: Commercializing Exclusive Digital Art /osgoode/iposgoode/2021/05/07/non-fungible-tokens-commercializing-exclusive-digital-art/ Fri, 07 May 2021 13:00:00 +0000 https://www.iposgoode.ca/?p=37271 The post Non-fungible Tokens: Commercializing Exclusive Digital Art appeared first on IPOsgoode.

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With more and more of the world’s and embracing Bitcoin in the recent weeks and months, clearly blockchain-based services have well and truly found their way into the mainstream of international business transactions. But while cryptocurrencies may be the first thing we think of when we hear the world “blockchain”, the recent boom in popularity of NFTs prove that blockchain is about more than secure but financial transactions, but also has the potential to have a direct impact on the future of the commercialization of intellectual property.

, better known as NFTs, are unique digital assets whose veracity is secured through blockchain systems. What differentiates NFTs from contemporary assets such as Bitcoin is their lack of fungibility—unlike a currency where any single unit could be exchanged for any other unit and retain the same value, each NFT is verifiably unique and representative of some digital asset whose ownership is tracked through the blockchain.

But what does any of this have to do with intellectual property? Well, much of the recent NFT boom has surrounded digital art, with some NFTs representing various pieces of art selling for . While there is debate as to whether this demand for NFTs represents a bubble that will soon burst, for the purposes of this article we are more interested in what NFTs represent. Digital art, unlike its physical counterpart, has always suffered from the limits of its medium. While any number of reproductions of a physical painting could exist, there typically remains but a single original piece which can contain significant value. There is no digital equivalent to owning the “original” piece, as there has never been a way to “own” exclusively an original copy of a digital work. Of course, Copyright laws are designed to prevent the unauthorized copying of substantial parts of artistic works, but owning the right to prevent the creation of copies of the work is very different than owning the original work. NFTs, in a way, bridge this divide.

By creating and selling NFTs that are representative of their work, artists and creators now have an entirely new way to commercialize their intellectual property. Creators have already begun to test the waters by selling NFTs of , and this is certainly only the beginning of creative ways to profit from NFTs. Selling an NFT of a work does not prevent the owner of that work from licensing or otherwise exploiting the intellectual property inherent in that work, not unlike how a piece of art can exist in a gallery but its image can be used commercially. It is clear that the advent of NFTs represent a brand new way for creators to gain value from their intellectual property, and it will be interesting to see whether the demand for these NFTs continues to rise, or if they will go back to simply being a .

Written by Keir Strickland-Murphy, JD Candidate 2022, enrolled in Professor D'Agostino's Directed Reading: IP Innovation Clinic course at Osgoode Hall Law School. As part of the course requirements, students were asked to write a blog on a topic of their choice.

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The Bitcoin Party: The Morning After the Halving /osgoode/iposgoode/2020/06/16/the-bitcoin-party-the-morning-after-the-halving/ Tue, 16 Jun 2020 17:49:29 +0000 https://www.iposgoode.ca/?p=35594 The post The Bitcoin Party: The Morning After the Halving appeared first on IPOsgoode.

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The Bitcoin halving of 2020 on came and went. For those with Bitcoins, it was New Year’s Eve at Times Square; for others, it was just another Monday. If it was just another Monday for you, I want to invite you to the conversation and give you the rundown of all things Bitcoin, the halving, and other overused buzzwords.

The best way to start is by Bitcoin and explaining a few key definitions (underlined below).

Bitcoin is online money. But it’s special. Dollars are sometimes said to be backed up by gold, which means that we all agree that you can exchange the piece of paper for a certain amount of gold. (Note: this “gold standard” is a monetary system that was replaced by “fiat money” and only serves as a metaphor). Bitcoins are decentralized, which means it’s outside of the agreement that pieces of paper (or cheques or e-Transfers) have value and banks aren’t relied on to keep records of the balance in our checking accounts. This also means that there are no physical pieces of paper, rather, this system uses a blockchain. But how do I transfer currency to you without the pieces of paper?  One solution can be that we can all keep track of it. But if we all keep track of it, doesn’t that mean that anybody can change it? The honour system is good, but trust issues are greater. Blockchain solves this issue with a math problem (a ).

understands a blockchain as something “you can add data to and not change previous data within it” using a “mechanism for creating consensus between scattered parties.” They “do not need to trust each other but only trust the mechanism by which their consensus as arrived at.” The basic idea is that without the pieces of paper as money, there needs to be some other way of keeping track of how the money is moving. The solution is that you announce the transactions to everyone. All the transactions (me transferring to you, you transferring to a stranger, etc.) are clumped together in a “block” to add to the “chain” of other blocks. To add to the chain, “miners” have to solve the cryptographic puzzle, which takes a lot of computer power. If they arrive at the right solution, they can tell everyone that they have the right answer and everyone can verify it. Solving the problem is hard, but once a solution is announced, it can be easily verified. A new “block” is then added to the “chain” and everybody starts using the new blockchain. For their trouble, the solver gets some bitcoins.

As a form of currency, Bitcoin has to be limited in some way, or else it would be worthless. Thus, halving exists to limit the supply of Bitcoins entering circulation. Halving refers to the number of Bitcoins a miner receives being cut by half. This stops inflation from decreasing the purchasing power of Bitcoins. Prior to May 2020, miners received 12.5 Bitcoins, but after halving, they will only receive 6.25 Bitcoins. is programmed to occur every 210,000 blocks, and since a new block of transactions is completed roughly every 10 minutes, halving occurs roughly every four years. Fewer new Bitcoins means that the supply of Bitcoins will become even more scarce, which might have some interesting implications.

As I write this, two weeks after the 2020 halving, Bitcoin is down Historically, it often spikes in price for the next year or two, but it’s not clear if the halving is the cause. We should be careful of correlations and hasty speculations. Word already spread about the Bitcoin gold rush. Inexperienced investors have joined the party and changed the market. What are some things that might affect Bitcoin prices? A safe bet would be a new law affecting Bitcoins. Alternatively, a major economic event, like the current worldwide pandemic, also has the potential to impact Bitcoin prices.  

If you are thinking about investing Bitcoins, do your own research and understand the risks. Be cautious of predatory that take advantage of amateurs. For my fellow Canadians, take a look at the . Interestingly, Canadian banks aren’t so thrilled about cryptocurrency. For instance, does not allow the use of its credit card for the purchase of cryptocurrency  

What kind of world will we be in at the next halving? Like the price of Bitcoin, your guess is as good as mine. See you in four years.

Written by Dan Choi, a second year JD Candidate at Osgoode Hall Law School and an IPilogue Contributing Editor.

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Blockchain: Revolutionizing Content Creation, Registry and Dissemination in the Creative Industry /osgoode/iposgoode/2018/03/29/blockchain-revolutionizing-content-creation-registry-and-dissemination-in-the-creative-industry/ Thu, 29 Mar 2018 16:09:34 +0000 https://www.iposgoode.ca/?p=31408 People often inadvertently refer to “Bitcoin” when they actually mean blockchain, perhaps largely because the Bitcoin cryptocurrency was the first application ofblockchain. But, blockchain is more than cryptocurrency. Cryptocurrency is a type of digital asset implemented using the blockchain technology. The blockchain technology allows cryptocurrencies to be stored and transferred on a distributed ledger using […]

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People often inadvertently refer to “Bitcoin” when they actually mean blockchain, perhaps largely because the Bitcoin cryptocurrency was the . But, blockchain is more than cryptocurrency. Cryptocurrency is a type of digital asset implemented using the blockchain technology. The blockchain technology allows cryptocurrencies to be stored and transferred on a distributed ledger using a peer-to-peer, open, public, and anonymous network. Thus, although blockchain technology was initially created to facilitate cryptocurrency transactions and is largely known for its applications in the financial services industry, any application that requires a registered ledger is a candidate for blockchain support. Industries other than financial services can benefit from adopting blockchain, including the creative industries which refers to economic activities concerning the generation and commercialization of knowledge and information.

The entered the blockchain world to solve four problems facing the creative industry: (1) unclear ownership of intellectual property (IP), (2) inadequate data authenticity (which often leads to unfair distribution of proceeds), (3) the centralized governance of publishing, distribution and platform management (which can prevent quality content from reaching consumers), and (4) difficulty in converting work products to liquid assets such as cash.

So how can this technology help creative minds address the aforementioned problems? Last Fall, I attended the launch event of to talk to its developers and find out. is a decentralized solution that harnesses the combined power of Consortium Blockchain, Public Blockchain and Cross-chain Interoperability to address challenges with respect to ownership and rights to the resulting content.

Decentralization means that the control of any process or service, such as domain or content registration, does not to belong to a single person, organization or government. Rather, the process is distributed among all users to record and track ownership of content that cannot be erased or modified by third parties.

Consortium blockchain is a type of a hybrid between and .

Cross-chain technology allows two people holding tokens (or any other asset) on two different blockchains to trade directly and instantly without the risk of one party pulling out of the trade before its completion.

So how does Ink use this technology?

Firstly, as , an attorney at Gerard Fox Law, : “When IP rights holders register their works to a blockchain, the rights holders can ultimately end up with concrete evidence of ownership, which is free from tampering, because once a work has been registered to a blockchain, that information cannot ever be lost or changed. So, third parties can use the blockchain to see the complete chain of ownership of a work, including any licenses and assignments.” Overall, the system addresses a fundamental challenge in content creation by allowing the owner and consumer to trail content ownership.

Secondly, the aforementioned blockchain designs each serve a distinct technical purpose. Ink strategically chose to use consortium blockchain to limit operations to country-specific regions. They refer to this concept as the “”. Given that content creators are bound by their country’s unique legal frameworks, regulatory policies and even cultural norms, the design had to account for complications that might arise from operating in multiple jurisdictions by implementing this very concept.

But, if the technology is only operable within a given country, how can Ink fulfill its mission to “distribute creative work without dzܲԻ岹”? This is where cross-chain technology comes in and acts like a bridge that allows information and content to flow freely between public blockchain (Qtum) and Sovereign Consortium Blockchain. For example, once you produce content that adheres to domestic regulations including copyright law, you can secure it on the local sovereign consortium blockchain. The content then passes into the proprietary Cross-chain Protocol to reach various public blockchains and can be traded through the blockchain globally.

By creating a decentralized registration system that allows one to claim ownership within seconds and reach its users around the globe through the cross-chain protocol, Ink is set to tackle the concerns of content providers and facilitate the flow of innovative ideas. It seems clear to me that, as part of the emerging decentralized web, blockchain has the potential to revolutionize our understanding of content creation, registry, and dissemination by using a decentralized database for IP.

 

Ekin Ober is an IPilogue Editor and a JD/MBA student at Osgoode Hall Law School and the Schulich School of Business.

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Algorithmic Accountability: Prof. Frank Pasquale’s Thoughts on Artificial Intelligence in the Law /osgoode/iposgoode/2017/04/06/algorithmic-accountability-prof-frank-pasquales-thoughts-on-artificial-intelligence-in-the-law/ Thu, 06 Apr 2017 14:26:27 +0000 http://www.iposgoode.ca/?p=30507 Algorithms are everywhere. Applied to systems like personal assistants, financial exchanges, and self-driving cars, computers now permeate almost every aspect of modern life. But how far should this algorithmic revolution extend into the law? Should contracts, judgement, and litigation strategies follow suit? These questions are at the forefront of Professor Frank Pasquale’sresearch and were the […]

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Algorithms are everywhere. Applied to systems like personal assistants, financial exchanges, and self-driving cars, computers now permeate almost every aspect of modern life. But how far should this algorithmic revolution extend into the law? Should contracts, judgement, and litigation strategies follow suit?

These questions are at the forefront of research and were the topic of discussion at his recent talk as part of the IP Osgoode Speaks Series. Prof. Pasquale brought with him a simple message to his talk: the law ought to be “A Rule of Persons, Not Machines.”

Correcting Bias with Bias

To begin, take the pinnacle actor of our legal system: the judge. Judges are human, after all, and they bring human biases with them to the court room. Studies demonstrate that judicial outcomes can depend on variables such as the performance of the or whether the decision was made before or after the . In contrast, computer algorithms can produce more consistent legal outcomes across a given set of cases. Humans are biased, after all, so why not replace them?

Algorithms have biases too, answers Prof. Pasquale. Their outcomes depend on the humans that develop their code. Which factors should be given heavier weight in a computer’s decision? How much room should be carved for the protection of constitutional rights? What if the software contains undiscovered errors? How should the system import contemporary societal values into its decision? In considering these questions, Prof. Pasquale shows that greater consistency does not equate to fewer biases.

In addition to these coding difficulties, computer algorithms are much better at evaluating backward-looking inputs than solving forward-looking problems. They may therefore be unable to effectively replace the law-making role of the judiciary. Take, for example, a situation where a computer must decide if constitutional rights should be extended to novel situations. Analysing historical data to determine the likelihood of a human judge allowing such an extension is not difficult, but fully predicting the extension’s effects on society is. It’s almost near-impossible: there are simply too many variables to consider, many of which, such as personal values, cannot be reduced to simple metrics.

Finally, Prof. Pasquale contends that algorithms lack transparency. Human-made judgments reduce legal logic into an intelligible, written form. This writing may be applied, built upon, or criticized by subsequent thinkers in the legal system. Algorithmic judgments do no such thing. Perhaps the coding and mathematics used to process inputs are intelligible, but they provide no guidance as to how the law is, was or ought to be applied.

Blockchain and Property Law: A Legal “Wild West”

Prof. Pasquale turns to concerns with emerging blockchain technologies like to demonstrate the real-world legal problems that arise when cold, efficient machines replace human judgement.

Institutions operated by human beings have traditionally been responsible for tracking and facilitating the exchange of goods and services for currency, at least for big-ticket items. If X purchased a car from Y, the bank would ensure a precise number of dollars transfer from X’s account to Y’s account, and the vehicle would be registered with the state in X’s name. Money is traded for ownership, and each step is traceable.

This is not the case with blockchain.

Instead of relying on trusted, human-run institutions to maintain the records, blockchain technology relies on its users – the public at large – to track one-another’s balances on their computers. A transfer’s legitimacy is verifiable because each user holds a secret digital key that they use to authorize the movement of their funds or property. This key is nothing more than a sequence of numbers – it has no name attached to it, and the only requirement to use it is knowledge of its sequence.

Although blockchain is revolutionizing transactions by cutting out the “middle man” and making them instantaneous and secure, they cause some serious legal headache. First, losing your authentication key means that you lose access to its value stored on the blockchain. If your car title is recorded on the blockchain in association with your digital key, losing your key means you’ve lost the only proof you have that you own the car. Compare this to losing your paper title to the car: you’d simply need to stop by your local registry with identification and pick up a new one.

Second, imagine your digital key gets stolen by a hacker who hops in your car and drives off into the sunset. Not only do you lack proof that he stole it, but, for all intents and purposes, the blockchain now considers him the true owner. The law cannot help you.

Finally, consider the law’s benefits and protections conferred on you by virtue of you owning your car. If the car is defective, you can return it to the seller. If your friend doesn’t return the car after you lend it to them, the law can force them to give it back. Consumer protections like these and many others are simply unavailable to you if the law does not recognize your ownership.

Prof. Pasquale makes it clear that although blockchain may become useful for certain applications, it illustrates the danger of replacing human-run systems with purely algorithmic ones. Blockchain is not going to make property law go away.

Algorithmic Accountability

It is a grim future, argues Prof. Pasquale, where machines replace the role of human judgement in its entirety. What role, then, does he see computers filling in the legal world? Artificial intelligence should enrich professional judgement, he suggests, not replace it. What constitutes a “better way” to do law must be decided with a broad, social understanding of the systems that the law serves; not through applying technology for the sole sake of efficiency. There is massive room for computers to improve the way that we do law, but it must be approached through a critical lens.

Principles of algorithmic accountability must be interwoven into these systems. Models must be transparent, data must be unbiased and algorithms must be applied to appropriate tasks. Leading thinkers and the public alike must be able to critique these systems and lend their voices to the software’s development. Technology is strengthened when subjected to an open and free exchange of ideas and criticisms, so legal innovation must evolve with public accountability.

Prof. Pasquale left the room with a parting thought: the legal profession needs to carefully shape the algorithmic systems it deploys, or else those systems will shape the legal profession. Using the words of Douglas Rushkoff, Prof. Pasquale warns,

“Program or be programmed.”

 

Mike Noel is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.

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Life After BitCoin: The Future of Banking May Be in the Blockchain /osgoode/iposgoode/2016/04/11/life-after-bitcoin-the-future-of-banking-may-be-in-the-blockchain/ Mon, 11 Apr 2016 13:36:14 +0000 http://www.iposgoode.ca/?p=29064 Introduction In the past 6 months, the US Patents & Trademark Office (USPTO) has published more than 200 patent applications filed by Bank of America, Goldman Sachs, JPMorgan Chase and other top-tier financial institutions for their own proprietary blockchain systems. Previously the territory of online anarchists and drug dealers, why are banks suddenly so interested […]

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Introduction

In the past 6 months, the US Patents & Trademark Office (USPTO) more than 200 patent applications filed by Bank of America, Goldman Sachs, JPMorgan Chase and other top-tier financial institutions for their own proprietary blockchain systems. Previously the territory of online anarchists and drug dealers, why are banks suddenly so interested in protecting this technology? It’s quite simple: it could save them a lot of money transferring money. A co-authored by UK-based Santander, the , estimated that blockchain technology could reduce banks' infrastructure costs by up to $20 billion dollars per year. While the blockchain is so much more than a bank’s cost-cutting measure, I endeavored to investigate for this purpose.

What is the Blockchain?

Many technology experts are vaguely aware that the blockchain is the technology underpinning Bitcoin, an open-source (and thus unpatentable) digital currency system which is both complicated and controversial. However, the blockchain itself, the mechanics of which can be personalized (and perhaps patented) is remarkably uncontroversial. A blockchain is essentially a record, or a ledger, of digital events. The information “bundle” which makes up an independent data transfer event is broken down and shared across geographically diverse and computationally isolated nodes (which are user’s computers) which independently confirm the event’s details. The ledger can only be updated by data consensus within the information ledger, making fraudulent transactions functionally impossible. Furthermore, once the information is , there is a certain and verifiable record of the transaction which lasts forever. In essence, the blockchain allows complete strangers to exchange digital property (currency included) in a completely transparent way without a central “clearing house” or intermediate organization required to process information or relay the outcome of the transaction.

Use & Potential

The intermediaries: credit card companies, payment processors, and international clearing houses have . Blockchain can do each of these data transfer events for fractions of a penny, regardless of location, without intermediary. Beyond cost savings, the blockchain presents significant risk reduction opportunities. The problem with the intermediaries we historically rely on, is that they can be hacked (think Target’s credit card data loss scandal), lie (think of securities fraud) or be plainly incorrect. Case in point, Estonia, which secures much of its banking infrastructure with a blockchain, now boasts the .

The Future of the Blockchain

Although over 40 of the largest chartered banks, including the above mentioned institutions, have agreed to a with the startup R3 CEV, finding an agreeable standard will be difficult and many early adopters may not want to share what they have worked for. Whatever your opinion of Bitcoin, the blockchain is here to stay and until a common source standard can be found, the mechanics of in-house blockchains will be a hot topic for IP lawyers.

 

Graham Haynes is a JD Candidate at Osgoode Hall Law School and is currently enrolled in the course “Legal Values: Commercializing IP” (Winter 2016). As part of the course requirements, students are asked to write a blog on a topic of their choice.

 

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Who Coined It First? The Advent of Digital Currency /osgoode/iposgoode/2012/05/20/who-coined-it-first-the-advent-of-digital-currency/ Sun, 20 May 2012 18:32:54 +0000 http://www.iposgoode.ca/?p=16561 When the Royal Canadian Mint (RCM) announced that it would be creating a digital representation of the Canadian Dollar in the form of MintChip, the digital currency sphere lit up with comparisons to numerous previous attempted forms of digital currencies – most notably Bitcoin, a decentralized electronic cash system developed by Satoshi Nakamoto. In an […]

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When the Royal Canadian Mint (RCM) announced that it would be creating a digital representation of the Canadian Dollar in the form of , the digital currency sphere lit up with comparisons to numerous previous attempted forms of digital currencies – most notably Bitcoin, a decentralized electronic cash system developed by Satoshi Nakamoto.

In an from Wired Magazine, RCM’s Chief Financial Officer Marc Brule defends MintChip as a novel path in the realm of digital currency. The exact path has not be thoroughly defined, as the RCM is still in the early stages of research and development. Instead, they have issued a Developer Challenge to the public in order to gather new ideas and directions (a video of the challenge can be seen ). However, stated within the rules of the Developer Challenge – any submission must be the original work of the developer, and cannot violate any intellectual property, proprietary, privacy, or moral rights or another person/entity (for the complete rules click ). And this is where the question arises of whether such a submission would be copying the idea of Bitcoin.

Firstly, the two concepts differ in how transactions are controlled. The driving force behind Bitcoin, , was to create a form of money that was “convenient and untraceable, liberated from the oversight of governments and banks.” The creator, Satoshi Nakamoto, ensured that bitcoins would remain decentralized and out of government (or third-party) control by publicly distributing a real-time ledger of all transactions called a ‘block chain’. The public distribution ensured that all transactions were broadcasted to the network of bitcoin users to ensure legitimacy and prevent duplicate transactions. It was very clear that Nakamoto intended bitcoin to be an alternate form of currency – one that co-existed as a more attractive alternative than printed currency. On the other hand, the RCM’s intention is to create a centralized system of digital currency. In fact, the purpose of MintChip is not an alternative to printed dollars, but a substitute – Brule was quoted by saying, “MintChip could be the digital equivalent for cash for online transactions.”

Secondly, the concepts differ in how currency is made. The Bitcoin economy relies on the network of its users’ computers. The release of bitcoins is predetermined – an algorithm releases new bitcoins into the network at preset intervals to ensure that the monetary supply grows proportionately with the number of users. Around the year 2140, the currency would reach its prescribed limit of 21 million bitcoins. Though Brule did not comment specifically on the creation of new currency, the system appears to retain the status quo – in which the Bank of Canada would be responsible for maintaining the monetary supply. Therefore, both the control and creation of currency differs.

It is, however, possible to argue that the bottom line is the creation of a digital currency. Each system intends to bypass a printed form and utilize a system of currency in digital form that would be used to purchase and sell goods and services. Though the bitcoin concept is a community-driven open source project, problems would arise governing the intellectual property rights. In reviewing the MIT License, permission is granted free of charge to any person obtaining a copy of bitcoin and its associated files to deal in the software without restriction or limitation with the condition that all subsequent copies of the software must contain the Open Source Initiative. This would run contrary to the rules in the MintChip Developer Challenge, whereby it states that any submission will forfeit all intellectual property rights to the RCM in perpetuity. The challenge would lie in determining whether the software submitted had copied the bitcoin system in any meaningful fashion.

However, there is a further complication. The problem lies in the creator of the bitcoin system itself - Satoshi Nakamoto. Since April 2011, he had claimed he had "moved on to other things", and has not been heard since. All other attempts of ascertaining his identity through his posts in forums, email addresses, and website have failed (more on the identification of Nakamoto ). And while his legacy continues with the use of the currency, his identity remains a mystery.

Despite its infancy, I believe MintChip possesses fundamental differences from bitcoin - differences that mean it is unlikely to infringe upon the Open Source Initiative's intellectual property rights. However, because of its infancy, it remains difficult to predict its outcome, and should be closely followed as it develops.

Byron Tse is a JD Candidate at the Western University Faculty of Law.

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