With all the hype surrounding Bitcoin and other cryptocurrencies, there has been a surge of patent applications relating to blockchain—one of the technologies underlying Bitcoin. To many, blockchain is seen as the next disruptive technology, with applications not only in the financial sector but also across a surprisingly broad range of seemingly unrelated industries. The result is a patent arms race, with companies pursuing blockchain-related patents in hopes of tapping in to what’s expected to become a multibillion dollar industry over the coming years.

What Is a Blockchain?

Originally invented for the Bitcoin cryptocurrency, a blockchain is a public, decentralized and secure digital ledger used to record transactions between parties. Instead of being stored in a central database, each computer node of a peer-to-peer network maintains its own copy of the blockchain. When a new transaction is requested, the transaction is propagated throughout the network, where each node independently validates the transaction, combines the transaction with other transactions into a block, and broadcasts the block to the other nodes in the network. If there is a consensus among the nodes validating the transaction, the block is cryptographically linked to the last block of the blockchain to securely and permanently record the transaction. The process of validating and adding transactions to the blockchain for cryptocurrencies is referred to as “mining.” Due to the decentralized nature of the blockchain, no single entity needs to be relied upon to manage the transactions.