The JP Morgan “Bitcoin Killer” Patent

With Jamie Dimon and Bitcoin in the news, I thought it would be good to look at US Patent 13/958881 filed Aug 5, 2013 by Denis J. O’Leary of JP Morgan Chase.

You can take a look at the patent here. It has absolutely nothing to do with Bitcoin, but does show a different vision for electronic cash.

The basic idea of JP Morgan is that consumers would have these super “PPP Wallets” from which they would do all their electronic buying. “PPP” Stands for “Payment Portal Processing” something only a banker could dream up.

The idea is as follows:

  • You keep your identity, coupons, links to your credit cards, and links to your JP Morgan Chase checking account into this special secure “wallet”
  • When you buy something online, funds are transferred out of that “wallet” using the existing Electronic Funds Network (EFT). This is apparently novel.
  • It’s secure because you initiate the transfer — it’s not something that somebody with your stolen credit cards can do.

That’s it. There are 20 pages of legal patent discussion, but it’s really that simple. No need for bitcoin, as long as we have a standard wallet framework. No need for an alternate currency.

I will say, that the idea is, in some sense brilliant in it’s simplicity. It solves the number one problem of payments on the Internet: making payments irrevocable and trustworthy. It does so furthermore without creating a new currency, without time lags for verifying blocks, without the need to “convert back to fiat”.

So why hasn’t this taken off. It’s been 4 years since it was filed — and actually over 17 years since the original intellectual property was created.

The issue, it appears, is standards. As big as JP Morgan Chase is, it is just one bank amongst thousands. The banking industry as a whole will never agree on a standard for such a wallet. This is why we have things like PayPal, and now, Bitcoin.

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