Stripe Seeks Blockchain Patent As it Plays Crypto Catch-up

After a six-year break, Stripe is back in cryptocurrency. A recent patent shows that it may have been plotting its comeback for a while. 

The company filed a patent application for a “fiat-crypto onramp.” This patent, filed originally in late 2022, aims to make crypto transactions faster and more seamless by using a “proxy cryptocurrency wallet” and pre-authorization techniques to ensure that a user has enough funds for their purchases. 

Stripe noted that the friction and complexity of crypto transactions can be a turn-off for consumers. “This delay, confusion, and poor integration can often lead to user drop-off and abandonment of the purchase, thereby making it difficult for entities in the cryptocurrency ecosystem to make sales using cryptocurrency, especially when working with consumers who are new to cryptocurrency transactions,” the company said. 

When a user initiates a crypto transaction, their crypto wallet first sends a pre-authorization to a proxy wallet, which includes details about the transaction such as what’s being purchased and the cost. Upon receiving the request, the proxy wallet checks whether or not the user has enough crypto to complete the transaction. 

If they do, the transaction is executed. If the user doesn’t have sufficient funds, this system will automatically purchase the remaining balance for them using the bank information tied to their account. This streamlines the process of making purchases with crypto, as it cuts out the additional step of the user needing to ensure their wallet is properly stocked beforehand. 

After putting its crypto plans on ice in 2018, Stripe will again allow customers to accept digital currency as payment, starting solely with USDC stablecoins, a digital currency pegged to the dollar. 

“Transaction settlements are no longer comparable with Christopher Nolan films for length,” Stripe Co-founder and President John Collison said during the announcement last week. “And transaction costs are no longer comparable with Christopher Nolan films for budget.” 

Stripe’s return could help restore some confidence in the crypto market after a tough few years, said Jordan Gutt, Web 3.0 Lead at The Glimpse Group. The company is one of the largest payments processors in the world, and its comeback could “play a role in increasing the standard and trust around cryptocurrency,” Gutt noted. “I think they’re preparing for a potential bull run for crypto.” 

Starting with stablecoins is also a smart move, said Gutt. “Stablecoins are great because, well,  they’re stable. They’re not volatile like Ethereum and Bitcoin and many others.” 

Stripe may be aiming to make it as easy as possible for people to access and actually use digital currencies, Gutt said. The seamless exchange and on-ramp between fiat currency and crypto make it so the customer doesn’t have to go through extra steps to use their crypto, he said, and opens up the doors for merchants to get involved in blockchain more easily. 

Plus, this would likely be integrated directly into Stripe’s existing systems, he said, making accepting and using crypto an easy add-on. “A huge part of it is the user experience, which is already great for Stripe,” said Gutt. “They’re able to widen the market for people who want to use crypto for payments, making it more trustworthy and being able to do it at scale.”