21 companies apply for patents, revealing Bitcoin mining profit sharing technology

On October 15, 2015 , the United States Patent and Trademark Office (USPTO) published a patent application from Bitcoin startup 21 Inc., No. 20150294308, for a "digital mining circuit." The application lists马修•波克尔, 21 Inc.'s former CEO (and current chairman), and his co-founders as the inventors of the technology. The application also reveals how mining circuits in various devices can be used to share profits or Bitcoin (or other digital currency) rewards among multiple participants.

Regarding 21st Century Business Herald's patent application, some industry insiders also expressed their opinions.

Opponents

克里斯•德罗斯, director of the Counter Party Foundation, tweeted to 21st Century CEO巴拉吉•斯里尼瓦桑:

“I am a fan of yours, and even more of a fan of Bitcoin. But… I think the product you developed is not very good. I strongly suggest that you change your development ideas.”

A former Qualcomm engineer told Epicenter that 21st Century’s bitcoin mining plans were pointless.

Qualcomm is an American radio communication technology research and development company. The company also relies on patented technology to make a lot of profits. It participated in the financing of 21st Century Business Herald through its venture capital institution Qualcomm Ventures and became one of the investors of 21st Century.

The engineer, who was confused by 21’s mining plan, did not care about 21’s patent application, nor did he approve of the business model of his former employer, Qualcomm. According to a cursory study of Qualcomm’s annual reports, 30% of Qualcomm’s annual revenue comes from Qualcomm Technology Licensing.

Qualcomm

Qualcomm is the world's leading patent technology owner. It owns 3G and 4G technologies and licenses technology to companies that develop 3G and 4G products. Licensing of related technologies and products is one of Qualcomm's main businesses.

Not long ago, Bitcoin company Coinbase also applied for a patent, but in this regard, Coinbase told Cointelegraph that they applied for a patent for protective purposes. 21 seems to be taking the initiative to use its intellectual capital to create a technology licensing program similar to Qualcomm, and even take advantage of Qualcomm's relationship with existing licensees, including all major mobile device manufacturers.

reveal

In an article published earlier this year titled “Any device can mine, everyone can mine,” 21st Century CEO巴拉吉•斯里尼瓦桑revealed plans for “BitShare,” an embedded mining chip that can also be used to pay “channel partners”:

“Manufacturers have the choice, and 21 Bitshare chips can be configured to support a variety of different revenue sharing models for bitcoin mining. For example, a manufacturer could build an internet-connected device that shares a portion of bitcoin mining rewards between users, retailers, phone manufacturers, and carriers, thereby reducing costs or increasing profits across the supply chain. Because mining operates as an awkwardly parallel problem, embedded mining can be scaled up or down to fit within the power and thermal envelope of nearly any device.”

In a world of contract freedom, telecom providers are finding it increasingly difficult to retain customers. Users can hop from one service to another. Carriers are forced to subsidize phones to compete for customers. While providers like Verizon may be breaking the mold, long-term contracts or customer models seem to be in jeopardy.

Free voice calls are now available through Google Voice and Google Hangouts. But Republic Wireless is putting some pressure on the industry. In June, T-Mobile announced its "JUMP! On Demand" plan and announced "Reformed United Carriers," where a low monthly phone payment covers the cost of a new smartphone and gives users the freedom to trade in a new phone... at no extra charge.

Last year, the hardware disassembly cost of Apple's iPhone 6 was at least $200, not including the price charged by retailers (service providers who bundle phone users with contracts and provide subsidies to phone users).

Operators in the sector have become increasingly erratic, announcing new plans with “added value” while taking away the value of handset subsidies.

The final conclusion is, how to get the most profit from users and retain customers?

21 seems to be able to offer a new “sticky” business model to both phone (or other device) manufacturers and service providers (i.e. businesses that provide data and connectivity). Customers are effectively locked into a mining scheme that earns the “channel partner” (i.e. device manufacturer or service provider) digital currency… even if the user switches carriers!

Apply

In its patent application, 21 explains what kind of device could be used:

"The electronic device may be a desktop computer, a server in a rack system, a portable electronic device such as a tablet computer, a laptop computer or a cellular phone."

And explained how the profits were distributed:

“A transaction may be allocated to multiple destination wallets. While a profit-sharing mining circuit is operating, the profit-sharing circuit allocates a portion of the newly mined coins to one or more predetermined wallets that have been assigned to the profit-sharing circuit (e.g., hard-coded dedicated wallets). For example, 50% (or any desired proportion) of a newly mined coin may be allocated to predetermined wallets. The predetermined wallets are sometimes referred to as “profit-sharing wallets” or “reward-sharing wallets.” The remainder of the newly mined coins may be allocated to one or more user wallets, such as the wallets of the miners operating the profit-sharing mining circuit.”

When designing and manufacturing the mining circuit, one or more profit sharing wallets may be hard-coded into the dedicated profit sharing mining circuit […].”

This technology will be hardcoded into the device, making it cryptographically difficult to jailbreak or opt out of mining:

“[…] the profit sharing wallet may be hard-coded into the dedicated profit sharing mining circuitry, including by mask programming, selectively shorting the pins of the integrated circuit chip (chip-level hard coding) or the solder bumps of the integrated circuit package (package-level hard coding) to the positive power supply or power supply ground, permanently programmed fuses or antifuses, or stored in non-volatile memory. If desired, the profit sharing wallet may be hard-coded, such as by configuration jumpers on a motherboard for installation of the dedicated profit sharing mining circuitry […].”

21 will also create a mining pool that will be useful for relatively low-spec devices such as mobile phones.

“…electronic devices with mining circuits can be combined into a pool of devices. For example, devices can be pooled together to help improve the overall quality of the pool, increasing the likelihood that the pool will be the first to discover a valid solution and add it to the public ledger….”

The Cointelegraph author concluded that it remains to be seen whether the telecommunications industry will participate in 21's future development plans. However, the company's patent application does reveal potential applications for various equipment manufacturers. Although 21 is still subject to many skeptics, I think 21's Bitcoin profit sharing technology will have a bright future.

Original article: http://cointelegraph.com/news/115426/21-inc-reveals-profit-sharing-technology-plans-in-patent-application
By Brian Cohen
Translator: printemps
Editor: printemps
Source (translation): Babbitt Information