What is a bitcoin? A bitcoin is a form of electronic currency that can be transferred through a computer or smartphone without an intermediate bank or financial institution.  A user can have a digital wallet to receive and/or transfer bitcoins, where the accounts and/or bitcoins are encrypted. When purchasing a bitcoin, a purchaser receives a private key portion of the encryption. To view the private key, a seal may be broken while the address associated with the bitcoin is visible.  Bitcoins may be a very useful form of currency when transferring money in peer-to-peer networks or internationally, where bank fees may be higher.

Douglas Fregelson (the founder of BitBills) recently had a patent published that is related with physical bitcoins. Each bitbill includes a bitcoin address, a private key, and also a QR code to receive and transfer bitcoins. The published patent application (US 2013/0166455) is directed towards a physical devices that carries a value and that can be physically delived, where the physical device includes a representation of the value carried by the physical device, the representation is usable to transfer the value from the physical device to the digital domain, and a security feature that can change to indicate that the value carried by the physical device has been or has not been comprised.

For reference, independent claim 1 is reproduced below. It should be noted that as of the publishing of this post no office actions have been issued.

  1. An apparatus comprising a physical device that carries value and can be physically delivered in a transaction,

the physical device comprising a representation of the value carried by the physical device, the representation being usable to transfer the value from the physical device to a digital domain, and

a security feature that can change from a state indicating that the value carried by the physical device has not been compromised to a state indicating that the value carried by the physical device may have been compromised, the change in state being detectable, the representation of the value carried by the physical device being inaccessible except in a manner that causes the security feature to change state.

At a high level “broadest reasonable interpretation standard,” I cannot see broad claims of this nature being allowed in a patent application. At a high level, I feel like a gift card with a scratch-off authorization code would meet these limitations.

Initially to construct the claim, I would break down the claimed limitations into two limitations “the physical device” and “the security feature.”

It appears “the physical device” may be a credit card, gift card, or really any “physical device” that can represent a value that can be transferred from the physical device to a digital device. I have purchased and been given gift cards before that have a predetermined amount written on them, such as $10, $20, etc. I believe this would meet the limitation of “a representation of the value carried by the physical device.” Once I swipe the gift card on a credit card reader, the value goes from the physical device (the card) into the “digital domain” (a digital representation done by the computers point of sale device.”

Next the limitation reciting “a state indicating that the value carried by the physical device has been compromised” may be read as a scratch off on gift cards that require authorization. I believe when I have been giving gift cards of high denominations, 1) the gift card must have been authorized by a store employee, 2) I must scratch off a scratcher on the back of the card and call an authorizing number.  Based on my interpretation the “scratcher” once it has been scratched can be used as an indicator that the physical device has been comprised.” Further, by requiring the cards to be activated by scratching a portion of the card to receive the authorization code, I believe the claim limitation reciting “the representation of the value carried by the physical device being inaccessible except in a manner that causes the security feature to change state” is met.

Based on my high level overview of gift cards and the claims for BitBill’s patent application US 2013/0166455, I believe it would be very hard for this broad of claims to be allowed by the USPTO.