Goldman Wins Patent For Its Own Cryptocoin Technology

Tyler Durden's picture

Goldman Sachs has clinched an important victory in its race to transition from a stodgy investment bank into a fintech powerhouse: it was awarded a patent for its proposed "SETLcoin" cryptocurrency settlement system, according to CoinDesk, the first to report on the patent.

“The US Patent and Trademark Office (USPTO) published Goldman's patent on July 11, entitled "Cryptographic currency for securities settlement". The bank made headlines when the existence of the patent application was revealed in late 2015.”

The concept envisions a system for settling securities trades using cryptocurrency instead of cash or other cash equivalents. When filed in December of 2015, the application notably outlined methods for exchanging SETLcoins for digitized stocks for firms like Google and Microsoft, as well as cryptocurrencies, naming bitcoin and litecoin in particular, as CoinDesk explains.

In its patent application, Goldman highlights the shortcomings of the clearing and settlement system, explaining how counterparties are forced to bear unnecessary risk during the period between when a trade is made and when it is settled, which can be up to three days for stock trades.

“The settlement of securities involves a process whereby securities or interests in securities (e.g., debt, equity, or derivative contracts) are delivered, usually against payment of money. A number of risks arise for the parties during the settlement interval that follows trading and precedes settlement. For example, after a trade for a security and before settlement, the rights of the purchaser are contractual and therefore personal; however, because such rights are merely personal, these rights are at risk in the event of the insolvency of the either counterparty to the trade. After settlement, the purchaser owns the securities, and the purchaser` rights are proprietary. Clearing involves modifying contractual obligations to facilitate settlement. Clearing houses, such as the National Securities Clearing Corporation (NSCC), provide clearing, settlement, risk management, central counterparty services, and a guarantee of completion for certain transactions (e.g., broker-to-broker trades, depositary receipts, and exchange-traded funds), and they serve as the central counterparty for trades in the U.S. securities markets. In the United States, the settlement date for marketable stocks can be an extended length of time--three business days after the trade is executed and for listed options and government securities it is usually one day after the execution.”

Then Goldman describes how cryptocurrencies like bitcoin work.

“A cryptographic currency is a digital medium of exchange that enables distributed, rapid, cryptographically secure, confirmed transactions for goods and/or services. One of the first cryptographic currencies to come to broad attention was Bitcoin, which is based on a peer-to-peer network, in 2009. Since then, numerous cryptographic currencies have become available, such as Litecoin, Novacoin, Namecoin, Feathercoin, Terracoin, Dogecoin, and Peercoin. Fundamentally, cryptographic currencies are specifications regarding the use of currency that seek to incorporate principles of cryptography (e.g., public-key cryptography) to implement a distributed and decentralized information economy. A digital currency, e.g., a bitcoin used in Bitcoin, is computationally brought into existence by an issuer (e.g., a bitcoin is "mined"). Digital currency can be stored in a virtual cryptographic wallet, (hereinafter "wallet"), i.e., a software and/or hardware technology to store cryptographic keys and cryptographic currency. Digital currency can be purchased (e.g., for U.S. dollars at an ATM or at an exchange), sold (e.g., for goods and/or services), traded, or exchanged for a different currency or cryptographic currency, for example. A sender makes a payment (or otherwise transfers ownership) of digital currency by broadcasting (e.g., in packets or other data structures) a transaction message to nodes on a peer-to-peer network. The transaction message includes the quantity of virtual currency changing ownership (e.g., 4 bitcoins) and the receiver's (i.e., the new owner's) public key-based address. Transaction messages are sent through the Internet, without the need to trust a third party, so settlements are extremely timely and efficient.”

...before providing a detailed description of how its SETLCoin system works, along with a summary of its most important innovation: the reduction in settlement times.

“The described technology concerns one or more methods, systems, apparatuses, and mediums storing processor-executable process steps to substantively instantly settle securities, based on cryptographic currency technology, without the risks associated with traditional settlement technologies.”

To be sure, Goldman knows what it is doing: a recent chart showing the blockchain ecosystem confirms that it is ripe for a major bank stepping in and profiting from the numerous "externalities":

According to Goldman, SETLCoin is a cryptocurrency that can be exchanged for financial securities over a peer-to-peer network, allowing trades to settle instantly because transfer of the SETLCoin is instant. Here’s how it will work:

“…SETLcoin wallet holds multiple positionable items (e.g., a security item, such as a share), herein referred to as a Positional Item inside Cryptographic currency (PIC), and a position (i.e., a quantity of the PIC represented by an SETLcoin wallet). A PIC is an agreed upon reference used by the peer-to-peer network to refer to, e.g., a particular security. For example, "IBM" (the stock market symbol of the company by the same name) can also be a PIC used by the peer-to-peer network to refer to IBM stock. A PIC, in some embodiments, is determined (and invalidated) by an issuer. An issuer (e.g., a company, underwriter, municipality, government, etc.) can have multiple PICS to represent different types of securities. For example, IBM stocks can be represented by PIC "IBM-S" and IBM bonds by PIC "IBM-B". In some embodiments, PICS are issued (and destroyed) by highly authoritative entities. For example, dollars available on the SETLcoin network represented by, e.g., PIC "USD" may be authoritatively issued by, for example, the U.S. Treasury. However, the described technology can issue PICS based on various other techniques (e.g., network node agreement, exchange regulation, lease or purchase, auction, etc.) and can be named based on, e.g., a company's name, its market symbol, its branding, its security name, availability, or a preferred format (e.g., length, abbreviation, etc.).

An SETLcoin wallet or transaction can house a single security, as described above, or multiple denominations of the same security (e.g., 1 IBM-S SETLcoin valued at 100 IBM shares). SETLcoin wallets or transactions may also house multiple securities (e.g., 1 IBM-S SETLcoin and 2 GOOG-S SETLcoins). SETLcoins are exchangeable for, e.g., other SETLcoins and/or other cryptographic currencies (e.g., peercoins). For example, a single IBM-S SETLcoin may be exchangeable for one or more "GOOG" SETLcoins (i.e., Google shares), for 13,000 USD SETLcoins, 100 litecoins, and/or for 5 bitcoins.”

It is unclear if and how Goldman's foray into blockchain will impact prices of existing tokens. You can read the whole patent here
 

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1stepcloser's picture

Muppet Coin is now operational

dasein211's picture

Dear Goldman Sachs,

Your private keys have been compromised. Please send 1 Billion$ in bitcoin to xyz address.
Signed,
Hackers who understand why cryptocurrency should be decentralized.

BaBaBouy's picture

Hello SETLcoinz, Crypto Number 1045 ...

When is the IPO ???

nope-1004's picture

And bitcoin is going to $3915?

LMFAO.

J6P will wait for the ETF.

WTFRLY's picture

Might as well call it JOOcoin

I_rikey_lice's picture

Call if JOOcoin if you want but it will destroy btc and all the other pretenders when it is established.

 

tmosley's picture

>patents

JPM showing that despite being the smartest people in the room, they are still staffed by old fucks who just don't get it.

This would be sort of like if GS had been around in ancient Greece and seeing the success of the coins made via the new gold smelting process, decide to come out with their own coin--made out of plutonium.

Overly expensive and deadly to hold.

Zero_Ledge's picture

Bad analogy.  Unlike gold or plutonium, anyone can, and will, create their own crypto system for currency, transactions, contracts, etc.

Maybe Satoshi will sue to enforce his own patent.  Oh wait.

 

tmosley's picture

Nope. It's a perfect analogy. There are literally infinite possible radioactive isotopes in the universe.

Most of them are so radioactive they will kill you in an instant if you are exposed to any significant number of atoms of them. Only a very few are stable. Even fewer useful.

Zero_Ledge's picture

Your willingness to defend your analogy with such bogus statements says a lot about your lack of rational analysis.

Have you created element 126? Tmoslium?  Alert the Nobel committee!

rado_watching's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.jobproplan.com

MalteseFalcon's picture

Oh! Ho!
Looky here!
GSCoin in the house!!
Wonder who has been fucking with BitCoin and Etherium the past few months??
Move over Lycos, Google is here!!

Can't wait for the endless pumping of GSCoin here on ZH!!!!!

Let's all greet our new masters!!!!

mtndds's picture

Oh we are really phucked now if GS has its own cryptocurrency.

BullyDog's picture

All because the lady loves dark chokalot.

So fake digital money to try and smash physical gold and silver from another direction.

 

They clearly don't own as much physical as we think they might.  LOL.  

HungryPorkChop's picture

Get Ready For A World Currency by 2018: Economists Magazine Cover 1988

Interesting..very interesting!

https://socioecohistory.wordpress.com/2014/07/26/flashback-1988-get-read...

FiatFapper's picture

Patents really are bullshit; there's a plethora of prior art but the USPTO doesn't give a shit as long as they're paid their fees which increase each and every year.

If someone patents a chair with 3 legs, then you could file a patent for a chair with 4 legs, so instead the patent attorneys use umbrella terms like 'a plurality of legs...' to cover a wider remit and make it future-proof.

So with that in mind, read the bullshit that they claim is their IP:

“The described technology concerns one or more methods, systems, apparatuses, and mediums storing processor-executable process steps to substantively instantly settle securities, based on cryptographic currency technology, without the risks associated with traditional settlement technologies.”

So what's to stop someone claiming 'a plurality of methods...' and 'substantively instantly (minus 1 atto-second)...'

You know the gigs up when banks start jumping on the bandwagon.

 

MalteseFalcon's picture

See "patent troll".

A famous example was the Selden trust where a vaguely worded, speculative patent was allowed to hold back the widespread introduction and manufacture of the automobile for a decade.

This is a widely used effective means of the powerful maintaining the status quo and preventing very necessary Schumpeterian creative destruction.

 

Just Another Vietnam Vet's picture

Nest up will be .....................

 

Just Another Vietnam Vet's picture

NEXT UP will be .....................

special new improved CRYPTOCOIN FOR ........

TESLA

ORACLE

IBM

Netflix

MSFT

FakeBook

Google

etc.

How long before bitcoin and the whole bunch start to smell.

 

Bigly's picture

Sheckelcoin, not setlcoin...

Bunga Bunga's picture

Not possible, Blankfein can always roll back the Goldmancoin blockchain.

robertsgt40's picture

Does GS realize the creation of crypto currencies is to avoid the GS web?

TahoeBilly2012's picture

It's like the Mafia donating money to the Vatican. 

38BWD22's picture

 

 

G-S is supposed to have LOTS of very smart people working for them (let's leave aside their ethical behavior).  No surprise to me they want in a crypto (of a sort).

It LOOKS like I won't be interested.  I hope that SETLCoin is not forced down our throats.......

Bigly's picture

Good.

Anyone who goes for GS crypto is a fool!!!

 

Squid Viscous's picture

Crypto Jews with a crypto currency... brilliant!

"those nice folks next door" would never fuck anyone over? right?

where can I buy some!

blue51's picture

As much as I loathe the Crypto J's , do you think there will be a good run at the beginning ?

Squid Viscous's picture

yes kind of like an overhyped but predictably bad Hymiewood "teen" movie.

all the losers will rush out to watch it,

but the back end revenues will be anemic

Alfred's picture

Yea, it'll be a glorious run. Now, GS doesn't have to steal your money... You'll just give it to them!

His name was Seth Rich

Observingmen's picture

Crypto Jews called Goldman and Sachs?

Squid Viscous's picture

alot of cryptos work there, like tony scaramooshi,

mother was a jew whore from Minsk

scaramoosh will do the fandango at the end of a rope.

 

messystateofaffairs's picture

Wow just what I always wanted, a Goldman cryptocoin.

Theta_Burn's picture

ASSimilation almost complete. goldman certainly "will have skim in the game"

 

order66's picture

Just what the world needs. Squidcoin.

1stepcloser's picture

SETL...Steal Everything thats Liquid....Should of named it SETH Coin.  

Lord Blankcheck's picture

We like Stealcoinz in the back office

Jedclampetisdead's picture

Fuckin jews always trying to enslave the gentile,  fuckin subhuman money grubbin trolls.

koaj's picture

At the next Janet Yellen testimony, maybe someone will hold up a sign to buy SETLcoin?

Dear squid...fuck off

Squid Viscous's picture

the SETL coin should have her face on it.

DC Beastie Boy's picture

There's no need to read the patent, anything involved with crypto currencies is foolproof, transparent, annonymous, safe and zero risk.

Too-Big-to-Bail's picture

Time for everyone to get out of cryptocurrency

Squid Viscous's picture

like the Caddyshack scene...

Goldman just dropped a turd in the pool

natxlaw's picture

Will this one be a candy bar when it's all said and done?

LightBulb18's picture

so isnt crypto currency basiclly just A currency?

e_goldstein's picture

Is it listed as:

MPPTFKR?

Sonny Brakes's picture

Tesla was originally granted a royalty for the production of every kW, but Westinghouse ran into financial trouble and Tesla eventually had to abandon his royalty claim due to circumstances. Imagine if he'd had one of those Philadelphia lawyers and how wealthy his estate would have become.

Something tells me that GS will be getting a cut of every financial transaction going forward.