Blockstream Files Patent Application for Sidechain Technology

Use patents to fight patents; Blockstream has announced a defensive patent strategy, whereby the recently published Sidechains patent application should only become a risk for those who want to patent the technology itself. Nonetheless, the disclosure of the filing raised some discussions about patents and blockchains.

The US Patent and Trademark Office (USPTO) published a patent application on November 10, filed by Blockstream in May. The patent describes “Systems and methods for transferring an asset from a parent chain to a sidechain.”

After the introduction, the application describes in detail how an asset can change the chain, the role of SPV-proofs and several challenges and solutions of sidechains. The application ends with the words:

“while one or more implementations have been described by way of example and in terms of the specific embodiments, it is to be understood that one or more implementations are not limited to the disclosed embodiments. To the contrary, it is intended to cover various modifications and similar arrangements…”

So, in short, Blockstream wants to patent as many instruments of Sidechain technology as possible. Sidechain means a method to take an asset of a blockchain, for example, Bitcoin, and transfer it to another chain in a way that the asset is frozen on the old chain and thus maintains its scarcity.

With a sidechain, it could be possible to extend the application for an asset without setting the main blockchain on risk or inflating digital assets by creating more coins. For example, Blockstream’s sidechains introduce confidential transactions and faster confirmations, while Sergio Lerner’s Rootstock sidechain wants to introduce an Ethereum-like virtual machine for Bitcoin.

According to Blockstream, a company employing about 10 Bitcoin Core developers, the patent application only aims to protect the technology against patent trolls. In July, the company announced its defensive patent strategy, which pledges to use patents only to fight patents. Roughly said, every technology patented by Blockstream should be freely usable for everyone. The only condition is that the user itself uses the defensive patent. More details can be found in Blockstream’s patent FAQ.

While most representants of the Bitcoin Community as the Electronic Frontier Foundation praised the patent system of Blockstream, the enthusiasm of Sergio Lerner remains low. In October, the Rootstock developer from Argentina had a discussion with Core developer Peter Todd. After Lerner published a soft fork proposal Rootstocks needs to become trustless, Todd demanded from Lerner to follow Blockstream’s patent strategy.

Now Lerner complains about Blockstream applying for a patent on sidechain technology:

Funny @petertoddbtc worrying about RSK getting a sidechains patent while @Blockstream had already patented it. https://t.co/l8YvWXmQEw (1/2)

— Sergio Demian Lerner (sergio.lerner.rsk) (@SDLerner) November 11, 2016

Todd, however, answers that he does not worry about Blockstream’s patent application since the company pledged for a defensive patent strategy.

Ethereum lead developer Vitalik Buterin has also been not enthusiastic about the patent filing. He notes that BTCRelay, a project of the Ethereum Foundation and Consensys to peg Bitcoin and Ethereum, has been the first Sidechain in operation.

https://t.co/dFpyyEHYIT Sigh. Sidenote reminder: btcrelay (an ethereum foundation/consensys project) is the first production "sidechain"

— vitalik.eth (@VitalikButerin) November 12, 2016

After this a discussion started, centering on whether or not the Foundation would need to ask Blockstream for permission to further operate or develop BTCRelay, after the patent is granted. Some say no, because the patent pledge is only defensive, while other say that the Foundation just needs to adopt the defensive patent itself to further operate a sidechain.

Maybe it is true, that blockchain technology needs the protection of a defensive patent strategy like Blockstream applied. Nevertheless, the topic is still up for debate.