PayPal, one of the most popular payment platforms in the world, filed an application for patent with the United States Patent and Trademark Office involving a tool that would accelerate the confirmation of transactions with cryptocurrencies.
The document is called “Expedited Virtual Currency Transaction System” was presented by PayPal and it mentions Sandy Lynn Godsey and Cheng Tian as its creators. The protocol proposes the creation of secondary wallets, with their own private key, that would be associated with the main wallet of the parties.
Afterwards, each secondary wallet will be configured with a fixed amount of currencies and, after sending the payment to the seller, one of these secondary wallets will be selected. At the moment of executing the transaction, the exchange value between the cryptocurrency stored in the secondary wallet and a fiat currency will be determined in order to determine the amount that will be transferred.
The document mentions the growth of the cryptocurrencies due to their decentralized character and the advantages they provide when it comes to making international transactions: “The virtual currencies such as Bitcoin have revolutionized the money transfers and the payment technologies by allowing person to person economic transfers.”
The text also points out the problems associated with this type of payments, mainly focusing on the delay of the confirmations and the optimal time for confirmation of the Bitcoin transactions, which is approximately 10 minutes: “In many transaction situations, a 10 minute wait time will be too long for payers and/or payees, and those payers and/or payees will instead choose to perform the transaction using traditional payment methods rather than virtual currency. Issues like this have slowed the adoption of virtual currencies despite their advantages.”
On the other hand, the Bitcoin community presented different proposals to solve the scalability problems of the Bitcoin network, as well as to solve the different congestions in the main Bitcoin network due to momentary increments in the transaction flow. Besides SegWit (Segregated Witness), a protocol that reduced the cost and accelerates the confirmation time and whose adoption increased in the last several weeks, we have seen the launch of Lightning Network protocol recently, a solution that creates instant payment channels and is ideal for microtransactions.
However, it is not clear if the protocol proposed by PayPal would go hand in hand with the adoption of the cryptocurrencies on its platform. Even though one of the PayPal’s founders, Peter Thiel, invested a lot of money in bitcoin, the payment platform does not seem to be that optimistic when it comes to the cryptocurrencies.
Thanks to the PayPal’s policy it is possible to commit frauds, since the buyer can report he did not receive the products and his money will be returned to him. Moreover, at the end of November last year, a PayPal user reported that her account was blocked by PayPal for selling cryptocurrencies without the right to reply. For this reason, it is not clear what the stance of PayPal would be in relation to the cryptocurrencies after the patent is approved.