Alibaba Group – China’s largest e-commerce company, has recently applied for a patent for a blockchain-based system with the US Patent and Trademark Office (USPTO) that allows a third party administrator to halt a smart contract if any illegal activities are spotted.
Alibaba’s Blockchain-Based System Stands to Fraud
The United States Patent and Trademark Office- USPTO released the patent document on Thursday, which was initially applied for in March.
As described in the document, the blockchain-powered transaction enables authorized parties to perform special transactions, like freezing accounts that are linked to illegal transactions and also permit administrative intervention in a blockchain network.
Moreover, the document reveals that the blockchain technology, even though it has unique features such as openness, decentralization, and unchangeability, is also incompatible when applied to the regulated environment. The patent authors explain:
“In real life, however, there is a type of administrative intervention activities in the category of special transactions. For example, when a user performs illegal activities, a court order may be executed to freeze the user’s account. However, this operation activity conflicts with smart contracts in existing blockchains and cannot be carried out.”
Although the scope of supervision will be limited, the sole purpose of the patent is to create a system where all accounts can have effective administrative supervision in a blockchain network. This, however, indicates that normal transactions will not be restricted in the blockchain network.
The patent reads further;
In some embodiments, corresponding smart contracts are created for different administrative supervision accounts (also referred to as designated accounts). In this way, upon receiving an operation instruction sent from a designated account, a node in a blockchain network can invoke a corresponding smart contract when determining that the operation instruction is issued legally, to execute corresponding operations on an account corresponding to the to-be-operated account information, which achieves supervision on accounts in the blockchain and enables special transactions like administrative intervention in a blockchain.
The patent authors have also noted that a risk is involved. Hackers can have administrator’s accounts as the first target.
“In this way, the supervision power of the accounts in the blockchain can be decentralization, such that the supervision power against the blockchain is not centralized in one designated account and the effectiveness and credibility of supervision can be ensured. At the same time, it prevents the loss of all supervision power over the blockchain when one designated account is compromised”
A smart contract is a computer program designed to digitally facilitate, verify and enforce the negotiation or performance of an agreement directly written into lines of code without a third party.
IBM Also Seeks Patent for Blockchain System
Earlier, analysts at the Bank of America predicted that the Blockchain industry could potentially be a $7 billion market. The banking giant claimed that they could boost leading companies like Amazon and Microsoft.
BoA’s analysts, however, did not stipulate the exact time for the industry to eventually hit $7 billion but based their thesis on a rough figure that on a yearly basis, 2 percent of corporate servers would be used to run Blockchain at a cost of $5,500.
Moreover, just like Alibaba, IBM has applied for a Blockchain system this summer. The patent is seeking to protect the method of the development of transaction data identifiers that are based on nodes.
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