TOKYO/SHANGHAI — As businesses around the globe eye new uses for blockchain beyond cryptocurrencies, China is quickly outpacing the rest of the world in patent applications for related technology.
The U.S., China, Japan, South Korea and Germany together received about 100 to 200 blockchain-related patent applications annually in the six years through 2014, according to Tokyo-based research firm Astamuse. Applications have skyrocketed in the last few years, largely thanks to China, with the cumulative tally reaching roughly 12,000 for 2009 through 2018.
Chinese players submitted roughly 7,600 applications in that period — about three times as many as Americans and accounting for over 60% of the five-country total. China overtook the U.S. in submissions in 2016.
South Koreans submitted around 1,150 applications over the same period, while Japanese applicants submitted about 380.
Chinese e-commerce giant Alibaba Group Holding, with 512 applications, topped the ranking of corporate applicants compiled by Japan’s NGB based on data from Innography. It was followed by the U.K.-based nChain with 468 and IBM with 248.
Hailed as the biggest invention since the internet, blockchain — which allows data to be stored in a largely tamper-proof format — first emerged as the building block behind cryptocurrencies like bitcoin. Companies have since been applying the technology to a variety of fields.
For example, Alibaba has actively drawn on blockchain technology to power its Alipay e-payment platform. It also uses blockchain to track products as they move from production lines to customer mailboxes, so it can block counterfeit goods, and for a money transfer service between Hong Kong and the Philippines.
Walmart is experimenting with using the technology to manage logistical data and improve food safety, while Honda Motor has partnered with BMW and others to develop a centralized system to oversee parking fees and highway tolls.
Amazon Web Services began offering a service that allows users to set up and manage blockchain networks in April. By providing the servers and system environment, which are costly to set up, the service will allow more companies to use the technology, an AWS representative said.
National governments are also joining the blockchain boom. The People’s Bank of China has set up a cryptocurrency research lab, which is developing new technology with an eye on patents. Both the PBOC and Sweden’s central bank are readying their own digital currencies.
Players that do not have patents “can face obstacles in their business” in the form of fees,” said patent attorney Hideto Kono. They can also miss out on cross-licensing opportunities if they do not have proprietary technology to offer the other party.
The global market for blockchain solutions will reach almost $15.9 billion in 2023 — about six times as much as in 2019 — according to International Data Corp. About 30% of spending will be in the financial sector, and over 20% in manufacturing, where blockchain is expected to make operations more efficient.
But technological hurdles abound. For example, because blockchain is decentralized, it is slow and unsuited to handle large amounts of data. Calls for new regulations regarding Facebook’s Libra cryptocurrency add further uncertainty to the field, while some worry that advances in quantum computing can undermine the security of blockchain technology.
Nikkei Inc. holds a stake in Astamuse.
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