Wednesday 23 August 2023

Satoshi or Not - Does it Matter?

Apparently as part of the build-up to the COPA v Wright hearing at the High Court early next year, an article appeared last month in Forbes (paywalled unfortunately, but easy to work around if you know how HTML works) with the title "Satoshi or Not, Here He Comes". The article is largely about Craig Wright, who is described rather charitably by the writer as an "Australian computer scientist". As an aside, if that definition applies then perhaps I should describe myself as a British computer scientist, based on my extensive experience of programming in BASIC on a ZX Spectrum in the 1980s. 

The writer of the article interviewed Mr Wright himself as well as a few others including me (in my human persona). The main thrust of the article is that, as the title suggests, it may not matter whether Wright is proven to be the person behind the pseudonymous inventor of Bitcoin, Satoshi Nakamoto. This is because the company he has been working for over the past several years now has an enormous patent portfolio that could soon be a threat to many. As the writer states: "if he can wield his trove of 800 granted and 3,000 pending patents in 46 jurisdictions the way he wants to, he could soon start charging for the right to build a wide variety of blockchain applications. That would affect everything from the $1 trillion cryptocurrency market to corporate implementations built by some of the largest companies in the world". That is quite a big "if", which seems to assume that Wright will still be around to wield anything after losing his court case as well as there being some value in the patent portfolio if he is. So, let's imagine what might happen if (as seems practically certain to anyone who is not being paid to say otherwise) Wright fails to prove to the High Court next year that he is Satoshi. This would primarily mean that it will become clear to everybody, if they were not previously aware, that Wright does not have, nor has he ever had, any special knowledge about Bitcoin. The patent portfolio should not therefore have any special status anymore, if it ever did have. Another consequence of this would be that, if Wright has been advancing a deliberately false case (which he has been known to do), this would cast serious doubts on the quality and provenance of any claimed inventions in the portfolio. Another point worth getting into is that Wright's so-called "Satoshi Vision" version of Bitcoin, BSV, is the basis of pretty much everything his company nChain has been working to build on since 2016. Most of the patent applications that have been filed since 2016, which now exceed 500 (based only on the number of GB priority filings) are based on the principles on which BSV is based, which are in important ways fundamentally different to those of the original Bitcoin. A substantial part of the patent portfolio's value would therefore be dependent on the principles of operation of the BSV network itself being valuable and something that others would want to use (for example for CBDCs, cattle tracking or  duplicate pictures of cute dogs, among other things). Unfortunately for BSV, this is evidently currently not the case, at least based on the current market value of BSV.

Going back to the article, an impression that it may have given (which I am sure was intended) is that, since nChain are being granted patents, the patents must be valuable. I was even contacted by someone very senior in the Bitcoin space who asked me directly why I seemed to be saying that the patents had value when, in his view, the portfolio was virtually valueless. I was indeed accurately quoted in the article as saying "A lot of these patents are, for better or worse, valid". This did not of course mean that I thought they were valuable. My view is, in fact, quite the opposite based on my own research on the European part of the portfolio, which at the time of writing amounts to 77 granted patents and 376 pending applications. To anyone familiar with how the patent system works, with a sufficiently technical-sounding specification and enough time and money, almost anything can be forced through the patent system so that it turns into a granted patent. This does not mean that the resulting patent has any value. If the claims are amended so that they cover a narrow technical implementation to work around prior art cited by a competent examiner, even if they cover what the applicant actually does in practice, the resulting patent is inevitably easier to work around and infringement can be avoided, making licensing tricky. For the few applications that do cover something broader and somehow work their way past an examiner (which has happened in a few cases), the resulting patents are more likely to be vulnerable to attacks in post-grant proceedings. What is left is effectively a lottery where an invention might be hidden amongst the trove that, by chance, turns out to be useful and valuable, but this would need a lot of persistence, focus and money to find. Given the enormous cost of prosecuting and maintaining a portfolio of hundreds of applications and patents in just one jurisdiction, it would need to take a world-beating invention worth at least hundreds of millions to justify the expense. It might, of course, be in there somewhere but I wouldn't bet on it.

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