The creator of Bitbill, Douglas Feigelson, has filed a patent application entitled “Creating and using digital currency”, and covers a general method of storing digital currency in a physical token. While the term is not used in the patent application, it is directly aimed at a generic method of so-called cold storage of cryptocurrency, of which Bitbill is not the only method.
The application, filed under 20130166455, states:
Among other things, a physical device carries value and can be physically delivered in a transaction. The physical device includes a representation of the value carried by the physical device. The representation is usable to transfer the value from the physical device to a digital domain. A security feature can change from a state indicating that the value carried by the physical device has not been compromised to a state indicating that the value carried by the physical device may have been compromised. The change in state is detectable, the representation of the value carried by the physical device being inaccessible except in a manner that causes the security feature to change state.
That is a fairly general description, and part of the patent references Bitbill as just an example application of the technology. Furthermore, Feigelson makes the statement, “Bitbills are the first and only Bitcoins in physical form”.
Leaving aside the debate over who was first and what technologies are being used, Bitbill is not the only physical form of bitcoin as there are Casascius coins, Bitcoin paper wallets, and Firmcoin (currently at the prototype stage).
Let’s Talk Bitcoin reports an instant message exchange between the Casascius coin creator, Mike Caldwell and one of the Bitbill co-founders, in which the Bitbill co-founder clearly states that they believe Casascius coins use Bitbill technology. However, the spokesperson would not be drawn on how the situation was to be dealt with.
While this patent may have been taken as a defensive measure, there has been no word from Bitbill to set minds at rest that litigation will not follow. In turn, the broad nature of the patent could have a potential chilling effect on the bitcoin ecosystem.
Finally, the patent has not been granted yet. There are suggestions that prior art exists which may yet invalidate the patent.