Alcatel, Now Owned By Nokia, Patented A Decentralized Payment System

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Decentralized Payments

French telecommunication company Alcatel-Lucent patented a decentralized payment system that would have, if implemented, utilized Bitcoin or another digital currency and a dual wallet system for spending and saving. Alcatel-Lucent was recently acquired by Nokia, though the patent predates that purchase and it is unclear if the project ever progressed past the patent stage.

Alcatel-Lucent is the parent company of both Alcatel, best known for its telecommunications equipment and mobile networks, and Bell Laboratories, one of the most successful research companies in the world with eight Nobel prizes awarded for work done at the company. The credited inventors on the patent worked at the Bell Laboratories division of Alcatel-Lucent. Nokia now owns all three companies. It is also worth pointing out that the division of Nokia that used to produce cell phones split off from Nokia the telecommunications company and is currently owned by Microsoft (who has renamed it Microsoft Mobile). There is no apparent connection to Microsoft and the Alcatel deal or this patent.

The Alcatel name may also be familiar to anyone who is a fan of Chinese android phones. Alcatel Mobile Phones was co-created by Alcatel-Lucent and Chinese manufacturer TCL. However, in 2005, TCL purchased Alcatel’s share of the brand and it has wholly owned Alcatel Mobile Phones since 2005, well before this patent was issued.

Companies often patent potential products and inventions without ever using them. This is particularly true with Bell Laboratories, which boasts over 20,000 patents.  With the Nokia, Alcatel merger, the situation is even more cloudy. So, this should hardly be taken as a confirmation that customers on the Alcatel or Nokia networks will soon find their phones pre-bundled with bitcoin wallets, but the very fact that they were working on a cryptographically powered decentralized payment system is interesting. The patent doesn’t indicate an Alcatel controlled centralized solution like Apple Pay or even a centralized bitcoin web wallet like Coinbase. Rather, the invention proposes a decentralized solution with a novel implementation involving two pieces of hardware. That should make it of interest to the larger bitcoin community, regardless of the current status of the project.

Titled “Decentralized electronic transfer system” the patent was submitted on February 25th, 2013 and was publicly published on January 29th, 2015. The patent describes a mobile payment system that would not require a third party to clear transactions and would instead use a “decentralized system” that uses and generates its own private and public keys. The patent mentions Bitcoin by name six times but also points out that the invention “is not limited to Bitcoin, and is applicable in other decentralized electronic systems where transfers are made.”

The inventors cite the difficulty of storing and securing private and public keys as a major flaw in current decentralized monetary systems like bitcoin.

“A drawback of the decentralized electronic transfer system is the risk of losing an unsecure repository, [wallet] and consequently losing all transfers made to this unsecure repository. Solutions have been provided in securing repositories thereby keeping them safe from theft and loss. This however is a drawback for the usability of decentralized electronic transfer systems as the bar to use the secure repository is significantly raised.”

The invention would have (or will if released) fixed this issue by giving the user two wallets stored on two different devices: one more secure and one easily accessible. It is unclear if the more secure wallet would be stored on more secure proprietary hardware or a personal computer.

“The present invention provides in an embodiment a method and apparatus for use in a decentralized electronic currency system that solves the usability issue with the above solution to key management, while also providing a generic mechanism for reducing the risk of loss of funds, i.e. any amount of currency the user may have accumulated as a result of past transactions. The method is based on the use of two electronic devices, a first `safe` one, which is to be stored carefully and possibly regularly backed up, and a second `unsafe` one, which is suitable to be installed on portable devices and used for payments in mobility context.”

What, exactly, Alcatel was planning on doing with this solution is not clear, though it seems like some sort of mobile currency storage and spending solution was in the works.

It is worth pointing out that in 2013, there wasn’t a successful mobile payment solution available for mobile payments. Google was offering its Wallet app, but it never hit the heights its current successor, Android Pay, has reached. It is possible Alcatel was exploring alternatives at the time and some of those alternatives apparently included cryptocurrency enabled decentralized payment solutions, but the landscape has changed significantly since then.

Again, it is not uncommon for companies to patent inventions they have no intention of using. That said, a decentralized bitcoin wallet being patented by one of France’s most popular telecommunications companies, which was just purchased for over $17 billion by one of the world’s largest telecommunication companies, is a note-worthy development, no matter the current status of the project.

We have reached out to both Alcatel and Nokia for comment but haven’t heard back at press time.