According to a recent patent filing, Paypal Inc. is developing a new protocol that will make crypto transactions faster — great news for Bitcoin and other digital currencies. Published last week, the patent details a new system that would transfer private keys outside of the blockchain to speed up transactions. Such off-chain solutions have been hailed by the likes of Microsoft as a solution to speeding up cryptocurrencies.
The payments processing company is one of many companies hustling to file new patents related to Bitcoin and other digital currencies. The application, filed with the U.S. Patent and Trademark Office, is for an “expedited virtual currency transaction system,” which the company claims will be able to significantly shorten digital currency transaction times.
What Does This Mean for PayPal?
The company says it wants to improve user experience and better compete against fiat credit card payments. Right now, its users experience a delay between the start of the transaction and when it is confirmed, with about a 10-minute waiting period being common.
“In many transaction situations, a 10-minute wait time will be too long for payers and/or payees, and those payers and/or payees will instead choose to perform the transaction using traditional payment methods rather than virtual currency,” PayPal said in the filing. “Issues like this have slowed the adoption of virtual currencies despite their advantages. Thus, there is a need for an expedited virtual currency transaction system.”
PayPal’s system will involve transferring private keys outside of the blockchain, using a secondary wallet with keys tied to predefined amounts of digital currency. The patent description explains:
“The systems and methods of the present disclosure practically eliminate the amount of time the payee must wait to be sure they will receive a virtual currency payment in a virtual currency transaction by transferring to the payee private keys that are included in virtual currency wallets that are associated with predefined amounts of virtual currency that equal a payment amount identified in the virtual currency transaction.”
Having to wait a long time for payments to go through has been one of the biggest criticisms levelled at Bitcoin. It’s what led Stripe to end support for payments made in Bitcoin earlier this year, with the company saying the digital currency had “evolved to become better-suited to being an asset than being a means of exchange.”
The “Lightning Network,” is another method that makes off-chain Bitcoin transfers through channels, and is touted by its developers as having the potential to offer “billions” of transactions per second. The protocol is presently being rolled-out. If both services see high levels of adoption, Bitcoin has a much better chance of mainstream adoption.