Bitcoin and blockchain technology are based on the principles of the open source movement: software that anyone can inspect, anyone can copy, and anyone can reuse.

This has worked very well for years. There have been a lot of useful innovations in consensus mechanisms, better security, new token types – which have been quickly adopted by other bitcoin project teams. But all these good things can change.

We are now seeing a growing number of companies patenting blockchain technology. This happens all over the world. But mainly in the US and China.

What's especially worrying about this is that many of the companies pushing blockchain patents are large. Some of the largest companies in the world: JP Morgan, Tencent, Paypal, IBM.

I have two specific issues with the way these big companies are filing blockchain patents:

First, many of these patents are fake. In fact, I know several major companies that have filed patents for ideas that already exist. This is really disturbing. It tells me that the patent office is not doing a thorough investigation into the state of the art. Prior art, by the way, is a patent term that basically means: “things that are very similar to what you are trying to patent have already been invented, so your idea is not new and therefore not patentable.” Yet patents are granted that should not be granted. Not good.

My second problem is that the patent office and the companies filing these fake patents will hurt all of us in the crypto world. And that's because these companies with those bogus patents will use their large size and deep pockets to sue. And patent litigation is extremely expensive.

This is really disturbing because many of these companies that are aggressively filing blockchain patents have been very unfriendly to the crypto movement. An example: the CEO of JP Morgan – Jamie Dimon – said a few years ago that bitcoin was fraud. He also said he would not allow his employees to do anything with crypto. And now? Well, JP Morgan has filed blockchain patents around the concept of offering security tokens. Oh, and JP Morgan is also now saying: it could create a stablecoin.

So what should the crypto community do about this?

I have a few ideas:

Native blockchain companies may want to change the terms of their open source software agreements. Perhaps put in language that requires these large public companies to cross-license their blockchain technology.

I also think that blockchain companies should start thinking about patenting the new technology they develop. Blockchain companies could then potentially pool their patents as a defensive shield against large companies that take an aggressive stance with THEIR patent portfolios.

The blockchain patent wars haven't started yet. But be aware. As this market develops and large companies begin to see the profit potential of blockchain, we will see patent battles.

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