Embrace Theft ... Just email your Private Keys with Paypal

CoinDesk- PayPal Is Seeking Faster Crypto Payments Tech
U.S. Patent Application- EXPEDITED VIRTUAL CURRENCY TRANSACTION SYSTEM

Toffer Wayne's Comments

Exchange hacks, Wallet thefts, outright Twitter crypto scams, ... Paypal figures why not turn into the wind instead of fighting it by proposing that a new crypto payment method should dispense with coin transfers and just transfer ownership of the private keys. I'll give them points for imagination, but this completely non-battle or market tested idea has some pretty obvious flaws.

An application for an "Expedited Virtual Currency Transaction System" published on March 1 by the U.S. Patent and Trademark Office (USPTO) details a method by which private keys - the strings of numbers and letters used to transact or otherwise control one's cryptocurrency holdings - are swapped from a buyer to a seller behind the scenes.

I'm still digesting the patent application as it's written in lawyer speak; but for now I'll post the abstract below. In short it seems they propose to create "secondary" wallets that will have new private keys spun up for each unique transaction. These new private keys are then securely transfered probably by email or a website to another user as payment. Clearly there are some issues with this plan, that might have solutions, but early thoughts include counter-party risk (what if the wallet is empty), and key theft (the original owner has the private key as well). The new owner of the currency would have to immediately transfer the funds to a 3rd wallet to avoid theft, but that is a risk.

Expedited virtual currency transactions are provided by identifying a first user primary wallet associated with a virtual currency and including a first user primary wallet private key. First user secondary wallets are created that each include a respective first user secondary wallet private key, and a respective virtual currency transaction is performed using the first user primary wallet private key to transfer predefined amounts of the virtual currency from the first user primary wallet to each of the first user secondary wallets such that first user secondary wallets are provided with different predefined amounts of the virtual currency. Subsequently, an instruction is received to transfer a payment amount to a second user, and the second user is allocated a subset of the first user secondary wallet private keys included in respective first user secondary wallets that are associated with predefined amounts of the virtual currency that equal the payment amount.