Circle bought 1,000 IBM blockchain patents. Nothing good can come of that

Circle, the USDC stablecoin firm, recently acquired nearly 1,000 patents from struggling tech giant IBM. The company touted IBM as a "pioneer in technological innovation" and claimed the new intellectual property would "advance the infrastructure that powers global, internet-native finance." However, the market response was not entirely clear, as Circle's stock rose by 2% in the wake of the purchase.

Despite this positive reaction, it is difficult to see how the acquisition aligns with innovation or benefits the blockchain sector as a whole. IBM's recent efforts in blockchain have been largely unsuccessful, as the company has largely missed out on the cloud and AI revolutions, and is often associated with the past rather than the future.

IBM's foray into blockchain began almost a decade ago with projects to develop a version of Ethereum for the corporate world, but leadership prioritized marketing over execution. IBM's patent portfolio is primarily a testament to its talent for drafting patent applications rather than a sign of real-world innovation. Circle, on the other hand, has been present in the crypto scene since 2015, and has built a strong business, primarily by collecting interest on its USDC stablecoin.

CEO Jeremy Allaire has not disclosed what he plans to do with the purchased patents, but potential outcomes could include lawsuits against competitors, intimidation of startups, or assignment of patents to patent trolls to generate revenue. In the worst-case scenario, Circle could employ these patents to coerce competitors into paying royalties or intimidate startups from competing.

While Circle's stock may have risen in the short term, it is unclear whether the acquisition will ultimately benefit the broader crypto industry.