Visa, the giant payment processor, has just filed a patent application concerning the creation of a cryptocurrency. The system described by the patent takes advantage of banks as well as a private blockchain to replace the physical cash and aiming for a cashless society.
Crypto made in Visa
The US patent office published Thursday, May 14, the patent application issued by Visa for the creation of a stablecoin.
The system is described there as “providing a distributed ledger, authorized by the private sector, for the management of digital currency”.
Several players will, therefore, take part in this system:
- The central entities, in charge of regulating the system and whose role will be held by central banks. They will be responsible for generating the parts.
- Validating Entities responsible for validating transactions and whose role will be held by commercial banks.
- Redemption entities ( redeeming entity ), in charge of exchanging cash for digital currency. This role will revert to ATMs and bank counters.
Through this system, Visa has a very specific objective, namely to get rid of cash, as the patent explains:
“The central entity computer causes removal of the physical currency from circulation in a fiat currency system. […] cash may be removed from the markets in a frictionless manner and the payment ecosystem may be improved”
The consensus method of this system has not yet been defined. Concerning the technical solution to realize the system, certain tracks were approached such as a private version of Ethereum, or Hyperledger Fabric. The consensus system will strongly depend on the solution chosen.
An insult for central banks
Visa puts central banks at the heart of its system by granting them supply management and the issuance of digital assets.
However, many of them are currently working on the creation of a Tokenized version of classic fiat currencies. Visa will have to bring strong arguments to convince them to use its system.
Before that, Visa would have to accept the patent and the project to be carried out, which is not necessarily guaranteed, as explained the spokesperson of the firm in Forbes:
“Each year we seek patents for hundreds of new ideas,” says a Visa spokesperson. “While not all patents will result in new products or features, Visa respects intellectual property and we are actively working to protect our ecosystem, our innovations and the Visa brand.”
Anyway, this project is still in the conceptual stage and it would take time for Visa to set up the system on a large scale.
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