Blockchain Privacy Innovation Insights from Patents

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Blockchain Privacy Innovation Insights from Patents
Alex G. Lee1
Patents are a good information resource for obtaining the state of the art of blockchain privacy technology
innovation insights.
I. Blockchain Privacy Technology Innovation Status
Patents that specifically describe the major blockchain privacy technologies are a good indicator of the blockchain
privacy innovations in a specific innovation entity. To find blockchain privacy technology innovation status, patent
applications in the USPTO as of June 15, 2020 that specifically describe the major blockchain privacy technologies
are searched and reviewed. 35 published patent applications that are related to the key blockchain privacy
technology innovation are selected for detail analysis.
Following figure shows blockchain privacy patent application landscape with respect to the innovation entity. As
shown in the figure, the key blockchain privacy innovation entities are IBM, Sensoriant, Inc., Alibaba Group ,
JPMorgan Chase Bank, Eygs LLP, Richard Postrel, SAP Se, Applied Blockchain, and NEC Laboratories Europe
GmbH.

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Alex G. Lee, Ph.D Esq., is a CTO and patent attorney at TechIPm, LLC.

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IBM
27%
Sensoriant, Inc.
9%
Alibaba Group
6%
JPMorgan
Chase Bank
6%
Eygs LLP
6%
Richard
Postrel
6%
SAP Se
3%
Applied Blockchain
3%
NEC Laboratories Europe
GmbH
3%Bitclave
Pte. Ltd.
3%
Charles Finkelstein
Consulting LLC
3%
Chromata Corporation
3%
Chronicled, Inc
3%
Digital Asset (Switzerland)
GmbH
3%
Labyrinth Research Llc
3%
Michigan Health Information
Network
3%
RenterPeace LLC
3%
Tbcasoft, Inc.
3%
Universita' Degli Studi Di
Trento
3%
Other
21%
Blockchain Privacy Patent Application Landscape USPTO 2020 2Q

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Following figure shows blockchain privacy patent application landscape with respect to the key technology
innovation field. As shown in the figure, Data Privacy is the most innovated blockchain privacy technology
followed by Zero-Knowledge Proof, Transaction Privacy, Smart Contract Privacy , User Profile Sharing (KYC),
IoT Privacy, Multi-Chain Privacy, Lightweight Blockchain Client Privacy, Privacy-Preserving Machine Learning,
Data Sharing, Privacy-Preserving Shared Distributed Computing.
Data Privacy
37%
Zero‐Knowledge Proof
25%
Transaction Privacy
17%
Smart Contract Privacy
3%
User Profile Sharing (KYC)
3%
IoT Privacy
3%
Multi‐Chain Privacy
3%
Lightweight
Blockchain Client
Privacy
3%
Privacy‐Preserving
Machine Learning
Data Sharing
3%
Privacy‐Preserving Shared
Distributed Computing
3%

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II. Blockchain Privacy Technology Innovation Details
Patent information can provide many valuable insights that can be exploited for developing and implementing new
technologies. Patents can also be exploited to identify new product/service development opportunities.
Anonymous Sharing of User Profile (KYC)/US20190028277 (IBM)
User consent-based information sharing is common. An example case is to share verified personal information for
improving compliance with know your customer (KYC) standards. If one customer makes changes of personal
information then those changes made to the customer data by one provider should be immediately visible to others.
However, service providers' relationships with customers must not be revealed while sharing information.
Additionally, when a customer decides to revoke access to his/her data to any service provider, that provider must
not be able to view any updates to the customer's data thereafter. Creating such privacy mechanisms can be
developed by storing a user profile in a blockchain by an authorized member of the blockchain, receiving a request
by another authorized member of the blockchain to access the user profile, identifying the request for the user
profile is from the another authorized member of the blockchain, creating a signed message that includes consent to
share the user profile with the another authorized member of the blockchain, and transmitting the signed message
to the another authorized member of the blockchain. The blockchain members are performed without revealing
blockchain member identities of the authorized member of the blockchain and the another authorized member of
the blockchain to any of the blockchain members.

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Following figure illustrates a configuration 100 for the anonymous sharing of a user profile.

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The configuration 100 includes a customer device 112, providers ‘A’ 116 and ‘B’ 118. The provider 116 is first
provider that has an established account profile stored in a blockchain on behalf of the customer device 112. The
provider 118 is the third party provider seeking access to the user credentials (i.e., name, profile information,
verified identity documents etc.). The blockchain members 102-108 represent established leaders or consensus
members to the blockchain 110. The providers can also be members to the blockchain and participate in consensus.
In operation, the customer device 112 enrolls to membership services 114 which receive customer account
information and store the information in a profile space of the blockchain. The provider 116 receives the customer
information (KYC) 124. Then, the provider 116 creates a user profile based on a new account, updated account, etc.
The information can be encrypted and stored 126 in the blockchain 110. The provider 116 can add/update the
customer information to the blockchain after encryption using a newly generated symmetric key. A request to
access the profile can thus be seen as a request to the blockchain for the decryption key. For anonymous key-
sharing, to avoid peer-to-peer key exchange that can violate the privacy of providers, the key is exchanged through
the blockchain itself. Relying on a trusted PKI, the profile decryption key is itself encrypted in such a way that only
other authorized providers on the blockchain network will be able to decrypt the key.
Subsequently, another provider 118 requests consent 128 and receive consent 132 from the customer device
112. The consent is a signed message that includes an encryption key or other information necessary to identify the
customer profile and access the information. The third party provider 118 then uses the signed credentials to
request the customer information 134 directly from the blockchain 110 without communicating with the original
provider 116. The original provider 116 submits an encryption key 136 that can be used to decrypt the customer

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profile. The blockchain member or other processing entity grant the access 138 based on information stored in a
smart contract stored in the blockchain. The information can then be received, decrypted and used by the third
party provider 118.
Following figure illustrates the configuration 150 for revoking the previously consented access right to the
user profile.

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The customer device 112 initiates the revocation operation 152 by notifying the blockchain of a decision to revoke
a previously granted access right. The provider 116, periodically, or via a trigger from an access revocation
operation, generates a new key 154 and encrypt the customer profile via the new key 156. In operation, the
previously privileged third party provider 118 now attempts to read the new key and customer profile 158 and
decrypt the profile unsuccessfully 162.
Signed consent and ACL-based access and revocation can include a blockchain using a signed message
representing customer's consent to authorize a provider for read/write access to the customer profile. Access can be
achieved without revealing a real identity of a provider to other members, otherwise the constraint will be violated.
Upon revocation, the signed message on the blockchain is invalidated, and a different decryption key is generated
to satisfy another constraint. The smart contract authorization decision is decentralized and is implemented in smart
contract, and thus, ensures consensus among members. Consent signed by the customer must not explicitly identify
provider B to satisfy the anonymous constraint. The customer must ensure that the consent request was originated
by provider B and not replayed by an unauthorized party. The consent must be explicitly bound to the profile
request so that it cannot be misused. The profile must be readable only by a provider possessing valid consent from
the customer. An auditor must be able to unambiguously map the identity in the consent to a real identity. Consent
revocation signed by a customer must not explicitly identify the third party provider. Future updates to customer
profile should not be readable to that revoked service provider.

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Anonymous Transaction with Increasing Traceability/US20200134586 (Tbcasoft, Inc.)
Some cryptocurrency transaction systems have higher anonymity and lower traceability, such as Bitcoin. A user
can open an account without disclosing any real world identification. Each account is identified by a virtual wallet
address. Account owners can then receive and remit cryptocurrencies from and to others. Transactions recorded in
blockchains include senders' virtual wallet addresses, recipients' virtual wallet addresses, and remittance amounts.
Such systems have high anonymity and low traceability, since there is no connection between account owners' real
world identification and their virtual world identification. It is almost impossible to trace the real senders and
recipients of transactions. As a result, such a system can become a money laundering facilitator. To avoid the
cryptocurrency transaction system from becoming a money laundering facilitator, the system has to provide a
mechanism to trace specific transactions when necessary while increasing anonymity.
To increase anonymity, several measures can be used: Transaction sender is not allowed to access recipient's
virtual identification so that it cannot easily trace a specific remittance transaction; Transaction recipient is not
allowed to access sender's virtual identification. However, to construct a remittance transaction, both sender's
virtual identification and recipient's virtual identification have to be used. Thus, the sender and recipient have to
work cooperatively but at the same time avoid unnecessary information sharing to protect personal privacy. Since
sender cannot access recipient's virtual identification, recipient has to provide a token to sender as a temporary
replacement of recipient's virtual identification. Through this approach, a hacker cannot trace specific remittance
transactions even if it can access the distributed ledger of the distributed transaction consensus network. Likewise,
no party can trace specific remittance transactions because it cannot match both sender's and recipient's physical

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identification and virtual identification. To further increase anonymity, a signature on the encrypted message can
be created and send them together to prove authentication of the message.
To avoid the cryptocurrency transaction system from becoming a money laundering facilitator, the system
has to provide a mechanism to trace specific transactions when necessary. A remittance transaction comprises a
plurality of sub-transactions (“transaction set”), including sending transaction, inter-manager transaction, and
delivery transaction. Either sender or recipient can create a label encrypted by using a tracing key for each sub-
transaction. The label includes information to identify each sub-transaction in a transaction set and their sequences.
A tracing key can be a symmetric key or an asymmetric key. When the tracing key is a symmetric key, each
cryptocurrency transaction system creates and holds its own symmetric tracing key for encrypting labels. The
symmetric tracing key is also shared with network administrator or an authorized/assigned node. The authorized or
assigned node that performs the tracing function is considered as network administrator. When the tracing is an
asymmetric key, network administrator or an authorized/assigned node creates a tracing key pair comprising a
tracing public key and a tracing private key. The tracing public key is used by cryptocurrency transaction system to
encrypt labels for each sub-transaction in a remittance transaction set. The tracing private is kept confidential by
the network administrator. When necessary, a network administrator or an authorized/assigned node can decrypt
the label and reconstruct the whole remittance transaction.

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Zero-Knowledge Proof for Digital Asset Transaction/US20200034834 (Alibaba Group)
Zero-knowledge proof is a cryptology technology such that is able to be designed to prevent an observer of the
distributed ledger from determining any information of the transaction that is taking place. Yet, the transaction
agent can use the proofs to verify access rights, correctness of the transaction and compliance of the operation
according to the defined business rules and system state. Such proof is also used to update the system state without
disclosing on the distributed ledger information about the participants to the transactions, the identifier that is
subject of the transaction and logical links across participants, identifiers and transactions. Thus, the system
eliminates the possibility of mining the data from the ledger to extract undesired data correlations and it protects
against leak of business intelligence on the distributed ledger.
Zero-knowledge proof algorithm can be combined with a digital asset publishing mechanism of blockchain
in digital asset transfer transaction so that a node device in the blockchain can verify whether the asset type of an
input digital asset is the same as the asset type of the output digital asset without providing any sensitive
information to the verifier.
In an unspent transaction output (UTXO) model, a digital asset transfer transaction is published on the
blockchain to trigger destroying a digital asset held by an asset transferor and recreating a new digital asset for an
asset transferee, so as to complete a transfer of the digital asset object between different holders. When the asset
transferor needs to transfer the held digital asset in the blockchain, the asset transferor can input the output digital
asset as input data to a commitment function for calculation to obtain a commitment value, and can generate, based
on the zero-knowledge proof algorithm included in the blockchain, a proof used to perform a zero-knowledge

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proof on the commitment value. Then, the asset transferor can construct the asset transfer transaction based on the
previous commitment value and the proof, and send the asset transfer transaction in the blockchain, to complete an
asset object transfer.
When receiving the asset transfer transaction, the node device in the blockchain can obtain the previous
commitment value and the proof that are included in the asset transfer transaction, and then perform the zero-
knowledge proof on the commitment value based on the previous proof by using the previous zero-knowledge
proof algorithm, to verify whether the asset type of the input digital asset is the same as the asset type of the output
digital asset in the asset transfer transaction.
If it is determined, through verification, that the asset type of the input digital asset is the same as the asset
type of the output digital asset in the asset transfer transaction, the commitment value corresponding to the output
digital asset is published on the blockchain for deposit, to complete transfer of the digital asset between different
holders.
Because the asset transfer transaction includes only the commitment value that is generated through
calculation by inputting the asset type of the output digital asset in the asset transfer transaction as input data to the
commitment function, and the asset type of the output digital asset is not included in the asset transfer transaction
in the form of plain text, the blockchain can hide the asset type of the digital asset transferred out by the asset
transferor, and privacy of the asset transferor can be protected.

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