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High value IP auctions, finally a way to moneterise the blockchain

June 20th, 2015 No comments

Team High-value-IP-auctions (Gary, Shlomie and yours truly) were at Hackcoin today. We targeted the opposite end of the market from Team Long Tail Licensing, i.e., high value at very low volume rather than low value at high volume.

One of the event sponsors was Nxt, a cryptocurrency I had not previously heard of. Nxt is unusual in that it is exclusively focused on the use of the blockchain as a tool for building applications, there is no mining to create new currency (it is based on proof-of-stake, which was all distributed at genesis). I was surprised at how well developed the software and documentation appeared to be (a five hour hack does not leave time for a detailed analysis).

So you have some very interesting information and want to provide a wealthy individual the opportunity to purchase exclusive access to it. There is a possibility that the individual concerned might not be very sporting about this opportunity and it would be prudent for the seller to remain anonymous throughout the negotiation and payment process.

A cryptocurrency blockchain is the perfect place to deposit information for which a global audience might be needed at some point in the future. The information can be stored in encrypted form (where it can hide in plain sight with all the other encrypted content), it will be rapidly distributed to a wide variety of independent systems and following a few simple rules allows the originating source to remain anonymous.

The wealthy individual gets sent details on how to read the information (i.e., a decryption key and a link to the appropriate block in the blockchain) and the Nxt account number where the requested purchase price should be deposited.

Once events have been set in motion the seller may not have reliable access to the Internet and would prefer a third party to handle the details.

The third party could be a monitor program running in the cloud (perhaps independent copies running on Amazon, Azure and Google to provide redundancy). This monitor program sleeps until the end of the offer period and then sends a request for the current balance on the account being used. If the account does not contain the purchase price, the encryption key and appropriate link is tweeted, otherwise the monitor program shuts itself down.

Those of you who don’t have any information that wealthy individuals might want to purchase could use this approach to run a kick-starter campaign, or any sale of digital goods that involved triggering product release after a minimum monetary amount is reached within a given amount of time.

Does the third party monitor program have to run outside of a blockchain environment? Perhaps it could be executed as a smart contract inside a crytpocurrency such as Ethereum. I did see mention of smart contracts inside Nxt, but unless I missed something they are not supported by the base API.

The designers of the Nxt blockchain have appreciated that they need a mechanism to stop it becoming weighed down by long dead information. The solution is pruned data, data that is removed from the blockchain after a period of time (the idea that a blockchain is an immutable database is great in theory, but dooms any implementation to eventual stasis).

Does our wealthy individual have any alternative options? Perhaps the information is copyright and the lawyers can be unleashed. I doubt that lawyers could prevent the information being revealed in this case, but copyright infringement via the blockchain is an issue that has yet to explode on the world.

The implementation was surprisingly straightforward and the only feature not yet working at the time of our presentation was tweeting of encryption key. We won first prize of 1-bitcoin!