Financial services giant Mastercard was awarded new blockchain patents this week, continuing its trend of embracing distributing ledger research even as it expresses open hostility to bitcoin and other cryptocurrencies. However, one particular patent is in fact raising eyebrows.
The patent, awarded by the U.S. Patent and Trademark Office (USPTO) on Thursday, outlines a system that facilitates anonymous transactions over a blockchain network. Mastercard first applied for that patent in December 2016.
According to Mastercard, the transparent nature of ordinary blockchain transactions is a hindrance to this tech’s adoption for every day payments. That’s true for both businesses and consumers.
An individual, for example, may want to purchase a gift for a significant other without the recipient being tipped off to the deets of the transaction. More to the point, most businesses would not be too stoked on providing competitors and other 3rd-parties with real-time data such as transaction volume.
From the patent:
“Thus, there is a need for a technical solution whereby an entity may participate in a transaction where transaction details may be posted publicly in order 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.”
An entire class of crypto’s have made anonymous transactions their primary focus, with the most prominent “privacy coins” including monero & zcash. Bitcoin’s Lightning Network (LN) also promises to enhance privacy once it is widely adopted.
Mastercard aims to accomplish this without the use of a public cryptocurrency, and in a way that would still provide law enforcement with the ability to trace illicit transactions — though this factor was not specifically addressed within the patent.
Moreso, while cryptocurrencies facilitate peer-to-peer transactions, Mastercard’s proposed system still relies on a third-party processing server, which, in this example, maintains a database of unique entity profiles. Along with identifying information, each entity profile includes a string of secret data.
After receiving transaction details from a business, the processing server creates two hash values. The server first hashes the transaction details, then it creates a second hash value by combining the first hash with the secret value from the entity profile. The hash value can then be published to a blockchain or other type of distributed ledger to prove the integrity of transactions without revealing their specific details.
Mastercard has won a variety of blockchain patents in recent weeks. One of which awarded in May uses a blockchain to manage coupon authentication and cut down on coupon fraud. Another, granted just this month, aims to lower prices and increase the efficiency of travel itinerary bidding.