By Brian Cohen
Alcatel-Lucent filed for Patent Application WO2013127713 A1 "Decentralized Electronic Transfer System" with the World Intellectual Property Organization (WIPO) on Feb 25th, 2013 and it was published on Sep 6th, 2013.
While I'm a little late on reporting the filing I am a bit surprised to not find any additional references to the application other than the filing with WIPO. With revenues of Euro 14.4 billion (US ~19.69 billion) in 2012, Alcatel-Lucent employs over 70,000 employees.
Alcatel-Lucent is incorporated (Société Anonyme) in France, headquartered in Paris and listed on the Paris and New York stock exchanges. At the time of the filing Alcatel-Lucent's market capitalization was approximately 3 billion US Dollars and the Market Capitalization of Bitcoin was about 325 million.
As of January 24th, 2014 Bitcoin's market cap is about 11.3 billion which is greater than Alcatel-Lucent's approximately 8.7 billion market capitalization. According to Alcatel Lucent's Homepage, Alcatel-Lucent "is at the forefront of global communications, providing products and innovations in IP and cloud networking, as well as ultra-broadband fixed and wireless access, to service providers, enterprises and institutions throughout the world. Underpinning Alcatel-Lucent in driving transformation across the industry is Bell Labs, an integral part of Alcatel-Lucent and one of the world's foremost technology research institutes."
The essence of the patent is a system whereby a decentralized currency such as Bitcoin is stored in a secure environment known as a Vault (i.e. secured repository) and a smaller unsecured portion of funds are stored in an unsecured Wallet (i.e. unsecure repository).
An unsecured wallet would be on a mobile phone for example. Funds are doled out from the secure vault to the less secure wallet to provide the wallet holder with less cumbersome and frictionless experience when spending bitcoin in day to day transactions.
If a user finds their wallet has been compromised they would then create a new vault because vaults and wallets are paired together so that if the original vault is emptied by the user (i.e. unfilled state) then it would invalidate the old wallet. While I don't find the patent particularly novel, it does address the need to separate a user's savings from day to day spending and additionally to facilitate making those daily transactions frictionless.
The technology was invented by Noah Evans and Fabio Pianese of the iconic Bell Labs subsidiary. Mr. Pianese lists in his biography that "His main long-standing research interests are in large-scale content distribution, distributed algorithms and P2P systems, networking and security." Noah Evans just left Alcatel-Lucent according to his LinkedIn profile.
In the middle of last year, Alcatel-Lucent announced its "Shift Plan" strategy to reposition the company as a specialist in IP Networking and Ultra-Broadband Access. As part of the plan it is shedding both assets and employees.
Alcatel-Lucent recently agreed to sell LGS Innovations LLC, its US Federal Government-serving subsidiary, to Madison Dearborn Partners and CoVant . LGS Innovations works closely with Bell Labs and is also called "LGS Bell Labs Innovations." LGS according to its About Us webpage
"draws its lineage directly from the ground-breaking research and development of AT&T and its famed Bell Labs...It researches, develops and deploys networking solutions dedicated to U.S. Federal Government operations around the world. Using a team of network experts, we provide network research, products, services, and networking solutions to the U.S. Department of Defense, Civilian Agencies and Advanced Program communities..."
It further describes itself as
"...the U.S. Federal Government's one-stop shop for all its networking and communications needs..."
In 2012, Alcatel-Lucent was granted more than 2,900 patents, and had a portfolio of 30,700 active patents with an additional 15,000 patent applications outstanding...In case you haven't been keeping track, that's 45,000 issued and pending patents. It is not immediately clear if Alcatel-Lucent will continue to work on Bitcoin technologies as part of its new corporate strategy the Shift Plan. It is also possible, but I have not verified, that the patent application "Decentralized Electronic Transfer System" was transferred to LGS as part of the sale. If so, LGS now joins Critical Technologies as U.S. Defense contractors working on or with an interest in Bitcoin technology. LGS recently had an interesting blog post ; "Encrypted Web Traffic: Have You Heard of the "Deep Web?" While it did not mention Bitcoin specifically, it stated
"...Encryption technology gives us the much-needed network security to support mission-critical communications, and learning about its "darker" uses will help us determine steps and strategies for combating subversive uses of the technology as it continues to evolve."
In Fall 2010 Alcatel-Lucent announced: "Voice Commerce and Alcatel-Lucent Mobile Wallet Service team up to accelerate adoption of mobile money" which enabled mobile operators to offer regulated financial transactions through Voice Commerce Cashflows services and also published the papers "Convenience Enables New Mobile Money Opportunities" (PDF) and "Bringing financial services to the Unbanked with Mobile Money Services" (PDF).
The Mobile Wallet Demo from Alcatel-Lucent can be viewed on YouTube. The service may be defunct as its part of its touchtag Internet of Things venture which apparently has been discontinued. Although the patent appears to be more along the direction towards a commercial product, it is entirely possible (but unlikely) that Alcatel-Lucent was developing this technology to streamline its future internal banking channels which currently have "12,000 high value payments...initiated monthly in 59 different currencies. (See Case Study [PDF] "Alcatel-Lucent selected SWIFT to streamline its banking communication channels and implement best in class transactional processes...").
Patent applications are seldom an indication that a commercial product is imminent. LTB reached out to Alcatel-Lucent for comment but none was available at press time.
"...A major issue with decentralized electronic currency systems lies in the underlying key management subsystem that enables users to emit and claim currency transfers. A first challenge is the risk of losing control (by theft, unauthorized duplication, or destruction) of an electronic device holding a public-private key, which implies losing all funds associated to this electronic device. Conventional solutions have been devised for securing electronic devices in fixed-access scenarios (workstations, laptops) based on disk file encryption and decryption combined with remote backup, thereby protecting such electronic devices from theft and loss as long as backup copies are preserved and the encryption passphrase is not forgotten. These solutions however have drawbacks for the usability of decentralized electronic currency systems as they significantly compromise the user experience..."
"...The present invention provides in an embodiment a method and apparatus for use in a decentralized electronic currency system that solves the usability issue with the above solution to key management, while also providing a generic mechanism for reducing the risk of loss of funds, i.e. any amount of currency the user may have accumulated as a result of past transactions. The method is based on the use of two electronic devices, a first 'safe' one, which is to be stored carefully and possibly regularly backed up, and a second 'unsafe' one, which is suitable to be installed on portable devices and used for payments in mobility context. Bitcoin is a decentralized electronic currency system using peer-to-peer networking, digital signatures and cryptographic proof-of-work to enable irreversible transfers (payments) between parties without relying on trust. Payments are made in bitcoins, a digital currency issued and transferred by the Bitcoin network. Nodes broadcast transactions to the network, which records them in a public history after validating them through a consensus-based proof-of-work system. The present invention is not limited to Bitcoin, and is applicable in other decentralized electronic systems where transfers are made..."
"...The method of an embodiment of the invention provides in a new 'state' of a repository, which enhances the safety of the budgets available in the repository in a different way. Instead of filling an unsafe repository (as is conventionally done) , the unsafe repository is provided with information with which it can refill itself. Thereby, the repository is not in a 'filled' state, since no transfers have been made to the repository. The repository is also not in an 'empty' state because it contains the information to be 'filled' . The repository is, as explained above, in a potential-to-be-filled state. Transfer codes are generated (transferring a value from a user's safe repository to the unsafe repository) and stored in the unsafe repository. When such repository would be lost or stolen, the rightful owner, who is also owner of the safe repository used to replenish the unsafe repository, can empty the safe repository by transferring the budget of this safe repository to a third repository. When the stolen unsafe repository would be used, meaning the codes stored would be published, these publications will be rejected by the public because the safe repository (from which the value to replenish the unsafe repository would come) is empty."