CME Group Files Patents to Bring Rule Changes to the Blockchain System
A very prominent and established player in the global financial industry - CME Group - has recently filed for a patent that allows developers to make certain modifications to the blockchain without the need of seeking consensus from all the nodes of the network.
The existing nature of the blockchain technology is resilient to any changes made to the network without the consensus from all of the network nodes. As a result, it makes blockchain technology more secured in a way that it cannot be easily tampered with. However, on the contrary, it also becomes a huge roadblock for implementing this technology across different applications or making any necessary changes to the existing system and implementing them quickly.
As a result, the CME Group has applied for a patent for having a flexible blockchain system. The patent was submitted more than one year ago in December 2016, however, the filing was published last Thursday, on Feb 8, by the U.S Patent and Trademark Office (USPTO).
In its patent filing, the authors have cited an example of an airline frequent flyer program which can store customer data on a public blockchain. Now, if the airline decided to introduce new features or make some changes like modifying the transaction fees for frequent flyers or adding a KYC identity program, then in the conventional blockchain system it will need to take a consensus from everyone present on the blockchain. This becomes a time-consuming process and moreover, if the majority doesn’t agree to the change, a hard fork would be required that would split the network and also have undesirable results.
The patent application explains by saying: “One example of a rule change is if the airline wants to increase transaction fees to transfer airline miles between parties. If the airline uses an open blockchain protocol like Bitcoin, where anyone may act as a node or miner, the increase in transaction fees would have to be approved by the blockchain users. The rule change would require virtually every node and miner to update their software before the rule change could take effect. Otherwise, a fork … may occur.”
For the new blockchain, the CME Group has proposed for a “method for synchronizing rule changes in a system, which implements a blockchain for transactions.” Once the node determines data that want to impose new rules on the network, it will validate the data and create a new block that contains information about the change in the network’s operational rules. This data will then be communicated to all the nodes in the network.
The CME Group has been an active participant in the blockchain and the cryptocurrency space. The financial firm has launched its own CME Bitcoin futures contract in the markets.