This recent BitGo patent kerfuffle has me thinking. Suppose you were successful in being awarded a patent for some novel bitcoin transaction construct. And lets further suppose that someone infringed on that patent by creating such a transaction construct and was successful in having it embedded in Bitcoin’s transaction history. If the patent holder was successful in arguing patent infringement, would that transaction then be considered invalid? Would subsequent transactions also be considered invalid? Would the entire block chain now be considered infringing upon this patent? Would users of blockchain technology (aka bitcoin) care? Is patent (and copyright) law fundamentally incompatible with the block chain?

My personal view is that software patents and copyright serve no social value. The good news is that in the very near future both constructs will become irrelevant. We don’t need to change the laws, they will simply fade into obsolescence and no one will even notice. In the early days (2011) of BitPay we spent some time filing provisional patents (one on decentralized bitcoin exchanges and the other related to clearing and settlement). I felt like it was a complete waste of time and money (much like the many hours of my life wasted with lawyers in revenue carve meetings earlier in my career). Why spend money on patents and copyrights when I could simply make these inventions available to anyone and profit from the increased utility of bitcoin? It made absolutely no sense.

Companies that claim they are against software patents but must “play the game” to avoid being destroyed by larger patent wielding adversaries either haven’t completely analyzed the game theory or are hypocritical. If they have conviction in their beliefs, they should instead create and publish prior art as open source software. This is the path that the bitcoin community needs to take.

On the subject of open source software, why would anyone in the bitcoin community accept anything less than fully open source software? Bitcoin would not exist were it not for open source; no one would have ever trusted it. Projects like Lighthouse will show how you can build important community infrastructure (like open source software) and directly profit from doing so. For a software developer like myself, I feel like these developements have been an eternity in the making. But I also believe the wait is nearly over. We are on the cusp of something truly transformative.

The answer is yes, patented and copyrighted software is fundamentally incompatible with blockchain technology (aka bitcoin).