American banking giant Bank of America had filed a patent application in October 2016, for a blockchain-powered data storage solution. On April 12th, the US Patent and Trademark Office (USPTO) has released the application.
While the amount of records concerning banking services and their service providers is experiencing exponential growth, the tradition methods of managing these records could use some improvement. The current methods of sharing records, for e.g. emailing them, or uploading them into the servers through the websites provided by the providers, aren’t secured enough. There’s no in-built authentication mechanism, and the traditional methods aren’t tamper-proof.
With it’s promise of decentralization and immutable record, blockchain can help. A permissioned and private blockchain will allow only trusted computers, called nodes, to join the network, and the identity of the nodes will be validated by the organizations identity verification system. The entire distributed database will be maintained in a shared manner by the nodes. Updating blockchain requires significant rigor, in view of the consensus mechanism employed by blockchain, which will ensure only the transactions approved by the majority of stakeholders can be recorded in the blockchain. This makes hacking blockchain economically non-viable.
Bank of America‘s proposed solution is following:
- The system will use a private blockchain, i.e. a permissioned one.
- Various types of records will be stored on the blockchain in a secured manner.
- Authentication of records will be done using cryptographic keys.
- The service providers will be provided with secured access to the system, only for the records concerning them.
- The above-mentioned access will be managed using cryptographic keys.
- The sharing of records with service providers will be done via this blockchain system, in a secured environment.
Bank of America, headquartered in Charlotte, North Caroline, USA, is awaiting the grant of the patent. Their move into blockchain conforms with a trend of banks and financial services companies increasingly exploring this promising technology, and filing patents for technology solutions involving it, for e.g.:
- Amex is awaiting a patent on technology solution they believe will boost transaction speed;
- Royal Bank of Canada has filed a patent application for a technology solution which will make calculation of credit score transparent to the consumers;
- PayPal has filed a patent for a technology which they believe will expedite Bitcoin transactions.