Goldman Sachs jumps the blockchain
Some have expressed their excitement recently on the back of the news that the United States Patent and Trademark Office (USPTO) has but only three days ago (July, 11 2017) granted Goldman Sachs a patent for a “Cryptographic currency for securities settlement”. It is understood that the initial submission was filed back in October 2014, and news of the application circulated late 2015, which means that this motion is in no way a surprise for many people who have been following the block chain space closely. In fact, multiple sources suggest that there are several applications for patent protection in the US, illustrating that the technology is indeed at the potential of more than just an ideology.
The reason this is mentioned here is because in addition to news highlights such as the abovementioned, we are also starting to see “mainstream” news provide their input to the cryptocurrency concept with a great deal of misinformation being provided and, even more concerning in my opinon, out-dated info information. A recent article that was circulated in Australia goes as far as labelling the system a creation of “anarchists”. Well, really, it shouldn’t be a surprise that the concept of blockchain was fundamentally an idea to disrupt the modern financial and subsequent transaction based system we have around the world. The potential of the decentralised smart contract technology sees by far the greatest evolutionary step in modern business practice, but mainstream are still trying to get their heads around the criminal use element and the politics. This is why the patent approval is significant. This tells the mainstream a lot of things they need to know.
Firstly, theory and practice are two very different things. Particularly, in the short term — before anyone can talk about bringing anything down it needs to be conveyed and accepted. Note that this doesn’t mean willingly accepted. Goldman Sachs isn’t the only high-power firm to make their presence in this area and the subsequent patent approvals that will be coming will further illustrate that high profile entities have identified a technological space much earlier than many seem to have thought. So have the capitalists actually accepted this change? We’ll see how it is to play out, however it’s convincing that they are not ready to lose their control.
Secondly, the government needs to get up to speed with this technology, and quick. Yes, In Australia, Data61 report has been released and it is understood that the ATO is in discussions with knowledgeable players on the topic, but I feel it is important that they take this seriously. Goldman Sachs are looking at securities trading in the US utilising the technological potential but in Australia firms are still trying to understand how cryptocurrencies are supposed to be treated and whether dealing in cryptocurrencies would affect the way in which licensed professionals could or should be utilising them, or the blockchain technology in their businesses.
Another trailing issue that may interest financial accountants and auditors is that the US GAAP has highlighted that they need to look at their accounting rules in respect to accounting for cryptocurrencies, so financially speaking, the necessity for movement by regulating bodies has slowly, but surely been recognised.
And this is why the Patent approval is important. This is an action that eventuated from a move that occurred quite some time ago and would signify that important names have made a move towards adopting this technology to their advantage early. Whether you would argue it was strategic, opportunistic, or simply defensive as a form of risk management, they are sending the message that they will be involved.