The Patent That Wants to Fix Crypto’s Volatility 5 2292

The number of blockchain-related jobs posted on LinkedIn more than tripled last year, according to CryptoCoin News. And blockchain patent filings more than doubled. Companies and individuals alike are innovating, exploring the blockchain’s well of possibilities. Major fintech companies, meanwhile, are gobbling up blockchain patents like they’re going out of style. But cryptocurrencies themselves still have yet to see a mainstream embrace.

The main problem with crypto right now is the same problem people have been talking about since Satoshi Nakamoto said Let there be Bitcoin: volatility. And ever since Bitcoin’s dramatic rise and fall around the turn of last year, cryptos have become virtually synonymous with wild fluctuations.

This reputation has given Bitcoin specifically, and cryptos in general, a mixed reputation. By now we’ve all heard the songs of praises from evangelists and the sour sneers of financial titans alike. Crypto is exciting because it’s unstable; crypto is unrealistic for the same reason.

The Primary Criticism of Cryptos

According to Eric Lamison-White, founder of the investor’s crypto intel platform Pareto Network, volatility is the “primary criticism of cryptocurrencies.”

But he doesn’t think it has to be that way. What if you could stabilize your crypto accounts? Lamison-White says the risks of owning cryptos are “easily mitigated by a variety of hedging techniques that are available in all other asset classes.”

He proposes treating crypto accounts like more traditional assets. “Hedging with options, futures and swaps allow for stable value or any risk profile that an owner or even a speculator would desire.”

That’s the idea behind his patent, filed in 2014, for a structure of interconnected accounts. The system “removes volatility from owning cryptocurrencies,” Lamison-White says, transferring its fluctuations into a hedge account. Here’s how it works.

Lamison-White’s System

The system requires at least two accounts: one for your cryptos and one you’ve funded with fiat currency, let’s say $400 US dollars. These accounts connect to a network of decentralized nodes, which measure the amount of cryptocurrency you have from moment to moment. If there’s any drop in the crypto’s value, the system automatically deducts from your $400 in the other account and transfers it to compensate. When the value of your crypto goes back up, the system re-deposits back into your fiat account.

This holds the value of your crypto assets steady, while transferring its volatility to your hedge account.

What makes it unique compared to other trading systems is that crypto assets can be divided into infinitely small portions. “A futures contract on oil costs $80,000 for example, although a trader only needs to put up maybe $4,000 as a minimum,” Lamison-White says. “This is because the contract represents the price of 1,000 barrels of oil or something crazy.” He notes that even hedging stocks are usually offered in units of 100 or 1,000.

Not so with crypto, where the “infinite divisibility of the asset itself” makes hedging much more finely tuned. Because cryptos are pure math instead of physical assets, “arbitrary sized contracts can be traded just as easily with larger contracts.” One future could represent one bitcoin, for example, but you can also trade in .01 increments. With fractional futures and options, people with very small amounts of cryptocurrency can be shielded from price fluctuations in a way that had only been available to the wealthiest and investment banks for most of the last millennia.

The System at Scale

The system gets even more interesting when you make it scalable. According to Lamison-White, you could have multiple people funding and connecting to the same hedge account, each using it to stabilize their own crypto accounts. Alternatively, you could connect multiple hedge accounts to a single crypto account. Suddenly the possibilities extrapolate, like tinkertoys, developing into an interconnected network of crypto- and fiat-funded accounts, with a variety of owners controlling their assets at a variety of access points, everything regulated with the intelligence and transparency of a decentralized ledger.

Patents Like This are Attracting Corporate Giants

There’s a feeding frenzy going on for patents like these. Visa filed a patent for a B2B blockchain payment system, Mastercard developed its own blockchain patent for anonymous transactions, and Wal-Mart has come out with a few as well. But it’s Bank of America that’s gobbling up the most. With claims to at least 43 live blockchain patents, the financial giant holds more than any other person or company.

Whether they’re just trying to get a leg up on the future of tech, or positioning themselves to harangue the little guy with barrages of lawsuits for intellectual property rights, we’ll just have to wait and see.

Whether or not Lamison-White anticipated the blockchain patent arms race, he was ahead of the curve, filing for his patent in 2014. It could be the thing to finally put skeptical minds to rest about the viability of crypto assets. And with big financial institutions like Bank of America placing a premium on innovative blockchain patents, he may have spun ether into gold.

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I grew up in the Silicon valley under the technological mentorship of Steve Wozniak. I'm a proud member of the Choctaw Nation, I've lived, worked and traveled all over the world, and I now write in the Pacific Northwest.

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The Bitcoin Bull Run: How It Started, How It’s Going Comments Off on The Bitcoin Bull Run: How It Started, How It’s Going 51

Wherever you stand on Bitcoin, there is no question about its impact on the role of blockchain and cryptocurrency within society.  Whether we look back to Pizza Day or to its heights in 2018, the volatile nature of the cryptocurrency has garnered much speculation and media coverage. 

While many looked at the past few years as a “Crypto Winter,” others saw an opportunity for Bitcoin.  Between COVID lockdowns, political, and fiat currency concerns, Bitcoin has been on a dream run – for a moment going over the $55,000 barrier.

Why Did Bitcoin Suddenly Explode (Again)?

Elon Musk and other influencers played a role in the recent rise in Bitcoin’s price. Tesla’s recent investment in an infrastructure to accept Bitcoin payments, and Apple Pay’s introduction of BitPay, a prepaid bitcoin MasterCard, are also major markers of market adoption. But two other events occurred that set the stage for the Bitcoin bull run: a pandemic and Bitcoin Halving.

Every four years, Bitcoin miners have their processing transactions cut in half. This reduction in supply then drives up prices based on scarcity. This occured in May 2020, when the economy was already at a standstill due to the pandemic. Since the supply of crypto coins is finite many think that there is lower inflation risk with using them – this means that it may be used as a hedge against U.S. inflation. In 2020, more than 20% of all dollars currently in circulation were printed, making crypto even more alluring. 

Crypto isn’t going anywhere. This year, experts project increased use of crypto cards, emergence of new cases, and increased investing from traditional finance leaders.

Take a look at this visual deep dive on the rise of Bitcoin for more information:

Bitcoin: Once A Diamond In The Rough, Now A Treasure

This New Blockchain Phone Has a Built In Cold Wallet 3 3374

The blockchain phone you didn’t know you needed has arrived. As phones have transformed into mobile devices they’ve absorbed tasks previously delegated to desktop computers, cameras, globes, flashlights, alarm clocks, and your Sony Walkman. Now you can add crypto wallets to the mix.

Digital Trends gave us the scoop on the Finney, the new phone by London-based mobile security specialists Sirin Labs. It includes a cold storage (fancy term for ‘offline’) wallet, a built-in token conversion service for smooth transactions, and a DApp center. They designed the phone to be the premier mobile “for crypto experts and novices alike,” according to their website.

It’s timely, as crypto is still trying to break through the membrane into mainstream adoption, and mobile could be the vehicle to make it happen. The Finney itself, though, may not make the crossover.

First, Some Tech Specs

Finney’s standout feature is a second screen hidden behind the top edge of the phone. The screen is actually a separate set of hardware altogether—the cold wallet itself. When it’s tucked into place, it’s disconnected and unhackable. Only when you slide the screen open does it go live so you can execute a transaction.

The phone’s software, SirinOS, is Android 8.1 modified for security and certified by Google. It runs on a Qualcomm Snapdragon 845 processor, with 128 gigs of storage and 6 gigs of RAM. It has a body of metal and Gorilla Glass, a 12 megapixel camera on the back, along with a fingerprint sensor. The Finney also features an Intrusion Prevention System (IPS) for an added layer of security.

Having the wallet placed at the top means the camera and fingerprint scanner are lower on the phone’s body than on previous models. See for example Sirin’s first phone, the Solarin, a security-obsessed $14,000 non-blockchain luxury mobile, which came complete with Italian leather backing and had a camera and fingerprint scanner where you’d expect them. On the Finney, the fingerprint scanner is too far down for effortless use. It invites slip ups where you press the camera lens instead.

The Finney is Nice, But It Will Take More to Mainstreamize Crypto

“It makes sending, receiving and converting cryptocurrencies securely on a smartphone surprisingly easy,” says one Digital Trends review of the Finney. But they qualify that ‘easy’ is relative, and the Finney is actually more of “a niche device for those who really are invested in cryptocurrency.”

Senior Writer Andy Boxall was less impressed. “The problem is its main feature,” that is, the cold wallet, “is only compelling to those who use, understand, and believe in cryptocurrency and the Blockchain.” For those who don’t already understand the ins and outs of crypto, it won’t be much of an advantage.

“Do not expect the Finney phone to make this baffling world [of crypto] much less confusing and problematic,” says Boxall. He describes the setup process as requiring trust in a bunch of companies you’ve never heard of, as well as the navigation of unfamiliar technologies and products. And for all the effort, he says, there’s little benefit for the crypto newcomer or ordinary mobile user.

“I carried on with the process because it’s my job,” says Boxall, “but if it wasn’t, I may have given up a lot sooner.” While the Finney hits many of the marks it aims for as far as design and functionality, simplifying the crypto process for novices doesn’t seem to be coming together with this phone.

“Living with the Finney has made it very clear that cryptocurrency is not ready for mainstream use yet,” says Boxall.

Get Your Finney If You Can

Sirin first released the Finney for sale only in exchange for their native SRN token. It went on the mainstream market in January so you can now purchase it with Paypal or, if you’re Gordon Gekko, a credit card. One final and important caveat: the company ships from their UK headquarters to 143 countries, but alas, the US isn’t one of them.

If you’re looking for a way to store your crypto securely and portably, make smooth crypto transactions on the go, or inspire jealousy in your American blockchain friends, the Finney may well be worth its $1,000 price tag. If you’re a newbie who’s interested in learning the ins and outs of crypto, there are better places to start.

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