Five Reasons Why Bitcoin and Cryptocurrency Startups Should Prioritize IP | McDonnell Boehnen Hulbert & Berghoff LLP

Despite recent headlines proclaiming “The End of Crypto” in light of large-scale failures at cryptocurrency companies such as FTX, Celsius, and Blockfi, innovation in the space continues at an accelerating pace. Startups around the world are focused on building new products and applications designed to improve users’ ability to manage and distribute their bitcoin and cryptocurrency assets. Like other markets emerging around a new technology, competition in this area is fierce as start-ups battle each other for users. In addition, large technology companies (e.g. Apple [1]Microsoft [2]and Google [3]) have recently expressed interest in cryptocurrency. These giants have significant resources and large user bases that they can leverage to potentially dominate the space.

To survive and thrive in this rapidly evolving environment, startups need to take advantage of their ability to innovate quickly, which can help them stay ahead of the competition. These companies should also prioritize securing intellectual property rights for their innovations. Here are five reasons why startups building on Bitcoin or other cryptocurrencies should put IP at the top of their priority lists:

1. Protect innovation: By securing patent protection for hardware wallets, graphical user interfaces and other innovations, Bitcoin and cryptocurrency startups can prevent competitors from copying their innovative ideas and technologies.
2. Create licensing opportunities: Bitcoin and cryptocurrency companies with patented technologies and processes can license these innovations to others, which can generate additional revenue. In some cases, Big Tech companies may seek to license proven innovations rather than develop the technology from scratch.
3. Improve market position: IP protection can give startups based on Bitcoin or another cryptocurrency a competitive advantage by creating barriers to entry for potential competitors.
4. Attract investment: Startups with strong IP portfolios are often more attractive to investors. Additional investment can serve as the fuel a startup needs to legitimize its technology, attract more users and grow.
5. Prevent imitation: Trademarks can help a startup protect its brand and prevent others from using similar marks that could confuse customers or dilute the strength of the brand.

Securing IP protection can help a startup establish a favorable position in the emerging Bitcoin and cryptocurrency markets and gain an advantage over competitors, including Big Tech companies that have more resources to use when entering the space. Startups in this space should place the pursuit of IP protection alongside their ongoing pursuit of innovation.

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