U.S. Patent No. 9,298,806
SYSTEM AND METHOD FOR ANALYZING TRANSACTIONS IN A DISTRIBUTED LEDGER
Inventor: Peter J. Vessenes, Robard B. Seidensticker III
Filed July 8, 2015
Described as “the fundamental patent for bitcoin clustering analysis,” U.S. Patent No. 9,298,806 (“the ‘806 Patent”) issued March 29, 2016 after a prioritized examination. The ‘806 Patent describes a technique for de-anonymizing distributed ledger (e.g. Blockchain) transactions.
The ‘806 Patent uses the available information made public by recorded transactions to mine out addresses, group addresses and therefore estimate identities. The ‘806 Patent provides a policing aspect to legitimize Blockchain transaction. (col. 2, ll. 26-29).
The software implementation, illustrated in Fig. 1, reviews public ledger information to determine addresses associated with one or more transaction. The ‘806 Patent provides a simple solution to readily-identifiable transactions, e.g. pairing address(es) to determine a public identity. For example, the ‘806 Patent can determine a real world identity of a transaction participant using a recorded address because “an entity may share its ownership or control of at least one address publicly to receive consideration.” (col. 8, ll. 57-58).
In more complicated transactions, further analysis tracks groupings for finding associations that garner insight into transaction participants.
Using the processing elements (within the machine-readable instructions) of Fig. 1, the ‘806 Patent then analyzes the addresses, determines groupings, and then generates an output, such as Fig. 9.
The identification component 122 identifies compound transactions within a distributed ledger. (col. 10, ll. 30-31). The address component 124 determines addresses from which consideration is co-spent in the identified transactions. (col. 11, ll. 3-5). The grouping component 126 associates addresses of the identified transactions with address groupings. (col. 13, ll. 42-45). The determination component 128 determines whether the: address groupings; potential groupings; and/or groups should be grouped together or held separate. (col. 14, ll. 39-43). The potential grouping component 130 records potential grouping information based on the determinations made be the determination component 128. (col. 15, ll. 16-20). The identity component 132 extracts identity data from the internet. (col. 20, ll. 49-50). The analysis component 134 identifies group transactions. (col. 21, 23-26). The presentation component generates a graphical representation of the group transactions. (col. 23, ll. 19-21).
The grouping component 126 further incudes a grouping strength identifier, here called a level. For example, the strongest grouping is a Level 0 group and the weakest grouping may be a Level 10. The software components (including potential grouping component 130) use the Level information to help analyze various groupings of addresses and participants in a coinjoin transaction.
The grouping component 126 further uses “grouping criteria,” which is described as data that “may define events that justify grouping or holding separate the first grouping of addresses, the second grouping of addresses, other groupings of addresses, and/or other potential groupings of addresses.” (col. 14, ll. 53-56).
Thus, using these software components, the ‘806 Patent can identify parties to various online transactions. This identification eliminates anonymity. The ‘806 patent relies on the publicly available information of addresses, the history of transactions using known addresses, relationship between addresses from current and former transactions, and network-available information associated with the addresses.
The ‘806 Patent was also the first issued U.S. Patent to include the term “bitcoin.” So yes, it appears that the first-named inventor’s claim is true – this is a “fundamental patent for bitcoin clustering analysis.” But as the ‘806 Patent further allows for address determination across multiple markets and currencies, this Patent can also be described as a fundamental patent for cryptocurrency clustering analysis.
The patent was prosecuted by : Sheppards Mullen.