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On Thursday, the US Patent and Trademark Office published an application submitted by Mastercard Inc. to allow the company to patent a “method and system for anonymous directed blockchain transaction.”

The patent proposes to protect the identifying details of individuals who make blockchain transactions. The application states that under existing systems, if a buyer desires to remain anonymous, as in the cases when businesses hope to conceal their practices and partners from competitors, they need to go through a third party. However, the issue with this model is that it requires a great amount of trust in that third party. Although blockchains are often touted as eliminating the need for a middle man:

“Identifiers of … part(ies) to blockchain transactions are generally viewable to those having access to the blockchain. Thus, there is a need for a technical solution whereby an entity may participate in a transaction where transaction details may be posted publicly to ensure accountability and trust in the data, while still providing anonymity and inability of others to track individual transactions or volume information by transaction party identifying information of both parties of a transaction to satisfy the confidentiality needs of each entity involved in the transaction.”

The patent’s method would conceal information about the transaction and involved parties using a multi-level encryption method involving two hashes. Included in one hash is the entity identifier stored as a “secret value,” which is only known to the involved parties and the processor. The second hash is created out of the first hash and the secret value associated with the second entity. The two hash values would be publicly accessible to verify the integrity of the transaction record. The patent summarizes this method as “a convenient and efficient system that may retain a higher level of privacy, confidentiality, security, and/or accountability than various existing systems.”

However, cryptocurrency seems to play no part in this method. Cryptocurrency serves a fundamental role in the trustless nature of a blockchain, as it incentivizes block producers, allowing the system to be decentralized. What Mastercard is suggesting does not replace the third party: Instead, the processing server functions as the third party, which is ostensibly trustworthy because it is not human.

The patent application does state that the hashes will be made publicly available, which ordinarily would prevent changes to the ledger, but the patent application also states that “the hash values may change with each transaction, to ensure that the transaction volume for an entity may not be identified and to further prevent efforts to identify an entity involved in a transaction.” This being the case, it is unclear what function the publication of hashes would serve, or how the immutability of the ledger could be guaranteed. 

Thursday’s patent is not the only blockchain-related innovation Mastercard has plans for. The company was awarded a patent for a “Method and system for blockchain variant using digital signatures” in April, as well as one for a “method and system for integration of market exchange and issuer processing for blockchain-based transactions” in January. Another Mastercard patent application was published in August 2017 for a method of processing cryptocurrency refunds, titled “Information Transaction Infrastructure.”

In the past, Mastercard has explored blockchain technology with a scrutinizing eye. In October 2017, the company announced its blockchain-based payment system, which also refrains from using a cryptocurrency. Justin Pinkham, senior vice president of Mastercard Labs, explained the company’s decision: “We are not using a cryptocurrency, and we are not introducing a new cryptocurrency, because that introduces other challenges – regulatory, legal challenges.”

Daniel Putney is a full-time writer for ETHNews. He received his bachelor’s degree in English writing from the University of Nevada, Reno, where he also studied journalism and queer theory. In his free time, he writes poetry, plays the piano, and fangirls over fictional characters. He lives with his partner, three dogs, and two cats in the middle of nowhere, Nevada.

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