We need a payment systems revolution and Bitcoin is part of the solution, Paypal could be jumping on the bandwagon
Forget about copycats that are trying to take away the crown of Bitcoin amongst digital currencies – forget about the satiric ambitions of Dogecoin (yes, really…) and the daring Coinye (formerly Coinye West…). If you are trying to decipher which one of the digital currencies might challenge the future reign of Bitcoin, look no further that the current dominating online payment system.
Yes, we are talking about Ebay and its subsidiary that is dealing with online transactions – Paypal. It was all the way back in July 2012, when the parent company has filed a gift token patent with the US Patent and Trademark Office. And all the way back in May 2013 when Paypal ex-CEO has vastly contributed through his VC fund to BitPay – a company that makes the bulk of digital transactions for retailers happen risk free.
Indian inventors Riaz Ebrahim Mohamed and Kavuri Tulasi Ram have devised a system that allows gift giving in the form of secure tokens. According to the patent filing, every gift from user of a payment provider (read Paypal) can be transferred to another gift recipient. Furthermore the recipient can use this gift to conduct purchases online by checking out through the payment system provider.
A very important addition here – the gift doesn’t actually have to be a gift – you can go straight to an offline store and buy one for yourself. Look at it as if you are able to purchase credit on your Paypal account without actually using your bank account nor credit card.
As the token functionality does not require an account on the payment system’s website to be opened, it essentially is a way to create a parallel financial system. The elimination of the middle man (credit card providers and banks) will certainly optimize transaction costs.
Let’s look at this patent in the context of the Target retail stores data breach at the end of 2013 when millions of customers have lost sensitive data, including credit and debit card records. The information provided by the company about 40 million people being potentially affected has shaken the grounds of the belief that our banking data safety is sound. So is a walk to your local retail park just like e walk in the park?
Payment system alternatives are a very important economic development for the current and future generations. The complexity and reliance on the current status-quo is overwhelming us up to a too-big-to-fail state. So Ebay and Paypal are more than welcome along with Bitcoin and others to provide us with as many as possible alternatives to a generally outdated mode of conducting secure transactions.
While the anonymity of Bitcoin’s creators has its perks amongst early adopters, Paypal could be aiming at taking advantage of its already solid reputation as an online payment solutions provider. If we add to this some transaction costs cutting, the development can only play in both the consumers’ and retailers’ favor.
The original patent application can be found on the website of the US Patent and Trademark Office.