Goldman Sachs may be the next big bank to become involved in the world of cryptocurrencies. The U.S. Patent and Trademark Office published a patent for the investment bank on July 11, entitled "Cryptographic currency for securities settlement." News of the patent application first broke in the latter part of 2015. What is "SETLcoin," and what might Goldman's plans be for the future now that the patent has been secured successfully?
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Means of Settling Securities Trades
Put simply, the patent is for a concept which enables the settling of securities trades through the use of a built-in cryptocurrency. When news of the patent application filing was revealed in December of 2015, the application set forth methods of exchanging so-called SETLcoins for digitized stocks for a variety of companies, including Google and Microsoft, as well as for cryptocurrencies. At the time, the currencies which were named included Bitcoin and Litecoin, although it's likely that others would be added given the current and much larger cryptocurrency landscape.
In a report by CoinDesk, details of the system become more clear. Goldman described it in terms of wallets, a familiar concept for the crypto world. "[A] SETLcoin wallet can house a single security or multiple denominations of the same security...SETLcoin wallets may also house multiple securities...for example, a single IBM-S SETLcoin may be exchangeable for one or more "GOOG" SETLcoins (i.e., Google shares), for 13,000 USD SETLcoins, 100 Litecoins, and/or for 5 Bitcoins." This seems to suggest that the system would be an effective means of exchanging between securities and different types of currencies, including both digital currencies and preexisting fiat currencies.
Patent Application Filed Years Ago
Although the wider world did not know of the patent application until late 2015, it appears that the application itself was initially filed in October of 2014. In the intervening time, a tremendous amount of activity has taken place within the cryptocurrency space. For a frame of reference, in late 2014 Ethereum had not yet entered the market, initial coin offerings were not yet a phenomenon, and the number of currencies was far fewer (it now numbers around 100). Is it possible that Goldman's concept would have already been developed in other ways through new currency exchanges? Possibly, although it seems likely that Goldman will nonetheless be playing a much more active role in the cryptocurrency world from this point onward. Big banks have generally been reluctant to get involved with cryptocurrencies, although some have recently begun to adopt blockchain technologies as ledger tools and for other applications. Goldman has so far provided no further indication of plans to realize the SETLcoin concept, nor has there been any timeline with regard to the project.