Microsoft And Cryptocurrency – How The Two Have Partnered Together So Far

A few months ago, the multinational tech giant received the green light from the United States Patent and Trademark Office (USPTO) on its patent for a software that helps users develop blockchain applications and create crypto tokens for various distributed ledgers.

The company has also announced plans to utilize the Ethereum blockchain to combat piracy.

In 2020, the company patented a cryptocurrency mining system that utilizes human activities, like brain waves and heat produced from observing online tasks such as using search engines, chatbots, and reading ads.

In this article, we take a deep dive into Microsoft’s most recent blockchain/crypto endeavors and what Microsoft founder Bill Gates thinks about the cryptocurrency industry.

Mine Cryptocurrency with “Your Mind” – Microsoft’s Greener Crypto Mining Project

On March 26, 2020, Microsoft Technology Licensing—the licensing division of Microsoft Corp.— received a patent for a “cryptocurrency system using body activity data” from the World Intellectual Property Organization (WIPO). The patent noted that:

“Human body activity associated with a task provided to a user may be used in a mining process of a cryptocurrency system,”

adding that:

“A brain wave or body heat emitted from the user when the user performs the task provided by an information or service provider, such as viewing an advertisement or using certain internet services, can be used in the mining process.”

The patent further noted that the mining method could “reduce computational energy for the mining process as well as make the mining process faster,” detailing that:

“For example, instead of massive computation work required by some conventional cryptocurrency systems, data generated based on the body activity of the user can be a proof-of-work, and therefore, a user can solve the computationally difficult problem unconsciously.”

The crypto mining patent also described a system where a device can confirm if “the body activity data satisfies one or more conditions set by the cryptocurrency system, and award cryptocurrency to the user whose body activity data is verified.”

The patent elaborated that the system could use different types of sensors to measure body activity, including “functional magnetic resonance imaging (fMRI) scanners or sensors, electroencephalography (EEG) sensors, near-infrared spectroscopy (NIRS) sensors, heart rate monitors, thermal sensors, optical sensors, radio frequency (RF) sensors, ultrasonic sensors, and cameras.”

That said, the idea of mining cryptocurrency using human body heat is not new, as other organizations have explored its possibility in the past. In 2018, the founder of the Dutch Institute of Human Obsolescence, Manuel Beltrán, created a bodysuit to harvest human body heat and feed the heat into a sustainable energy source, which generated electricity. The electricity then gets used to mine cryptocurrencies on a computer.

Microsoft’s Recent Patent Approval for Carrying Out Cross Chain Token Service

Microsoft also received a blockchain-related patent from the USPTO in August this year to initial ledger-independent token services. This patent grant will allow the company to develop a scheme to facilitate the creation and management of tokens across several blockchain networks.

The system would also give developers access to token templates to illustrate the different kinds of digital assets while defining controls and functionalities. With this, developers can write code for tokens on various blockchains at the same time.

The patent stated that Microsoft aims to fix the problem around creating crypto tokens for different distributed ledgers. At the moment, successfully executing this task is significantly arduous due to the absence of standardized token development procedures across various blockchains.

That said, the token service patent focuses on developers who use enterprise platforms instead of public blockchains. The patent highlighted some of these enterprise platforms including, Hyperledger Fabric, Quorum, R3 Corda, and Chain Core.

Microsoft has always had a keen interest in interoperability. In 2019, the tech behemoth launched the Token Taxonomy Initiative—a token standardization scheme that allows enterprises to create multi-functional (blockchain-neutral) tokens.

Network interoperability has been a critical focus for many in the crypto space, as several crypto companies aim to build lasting solutions. One of such endeavors is the decentralized oracle network Chainlink, which launched the Cross-Chain Interoperability Protocol (CCIP) in August.

Over the past few years, blockchain-related patent applications have surged due to the increased adoption and investment in blockchain technology and crypto.

According to a report by the Intellectual Asset Management Magazine earlier this year, Ant Group—an affiliate company to Alibaba Group—has applied for over 2,000 blockchain-related patents since 2015. Interestingly, the Bank of America (BofA) recently announced that it had received 227 patent issuances this year alone, 8% of all blockchain patents issued.

That said, multinational technology company IBM boasts the highest blockchain patents in the US.

Microsoft Plans to Root Out Piracy in the Tech Space Using the Ethereum Blockchain

Microsoft’s research department, in collaboration with researchers from Alibaba and Carnegie Mellon University, released a paper on a blockchain-based incentive system to support anti-piracy activities. Termed “Argus: A Fully Transparent Incentive System for Anti-Piracy Campaigns,” the research got published in August this year.

Hosted on the Ethereum blockchain, Argus is designed to provide a trustless incentive mechanism while simultaneously protecting data collected from a basket of anonymous piracy reporters.
The paper detailed that: “We see this as a distributed system problem,” adding that “In the implementation, we overcome a set of unavoidable obstacles to ensure security despite full transparency.”

According to the paper, Argus can trace pirated content to the originating source with a corresponding watermark algorithm. Also dubbed “proof of leakage,” every leaked content report gets an accompanying unique feature that hides information. By doing so, only the informer can make multiple reports on a watermarked copy without necessarily owning it.

That said, to prevent informers from gaming the system using different names, the system comes with incentive-reducing protocols (safeguards). The report detailed that:

“With the security and practicality of Argus, we hope real-world anti-piracy campaigns will be truly effective by shifting to a fully transparent incentive mechanism.”

To remedy the issue of Ethereum gas fees, considering that the system operates on the Ethereum blockchain, the paper explained that the development team fine-tuned several cryptographic operations “so that the cost for piracy reporting is reduced to an equivalent cost of sending about 14 ETH-transfer transactions to run on the public Ethereum network, which would otherwise correspond to thousands of transactions.”

Microsoft Founder Bill Gates on Cryptocurrency

While Microsoft appears to be big on the idea of blockchain and cryptocurrency, its founder—Bill Gates—is not sold on it.

Some months ago, Gates spoke with Bloomberg Television about Tesla CEO Elon Musk’s Bitcoin holdings. Musk has been a vocal supporter of crypto for a long time and recently revealed that he personally held some coins. Earlier this year, Tesla added $1.5 billion worth of BTC to its treasury.

At the interview, Gates noted that,

“Elon has tons of money, and he’s very sophisticated, so I don’t worry that his Bitcoin will sort of randomly go up or down.”

While the tech mogul clarified that he was not concerned with the effect of cryptocurrency on Musk’s fortune, he cautioned others who are considering investing large amounts into Bitcoin or other cryptos to be wary. Gates noted that, “I do think people get bought into these manias who may not have as much money to spare.” He added that, “My general thought would be that if you have less money than Elon, you should probably watch out.”

With that, you can deduce that Bill Gates does not believe investing in cryptos is a good idea. Like many other prominent figures who do not subscribe to the idea of investing in crypto, Gates’ comments show that the tech mogul has little understanding of the crypto industry or why people invest in it. Nonetheless, Gates is entitled to his opinions on crypto, despite all its flaws.

It would be interesting to see whether Microsoft would get more involved in the crypto space in the future. We could see Microsoft embark on more blockchain/crypto-based projects and, who knows, possibly get direct exposure to cryptos.

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