- While the USPTO published the patent application on May 14, Visa filed it on November 8, 2019.
- Visa’s crypto system would leverage a private blockchain network, central banks, and commercial banks.
- The crypto system could potentially run on the Ethereum Network.
Visa International, a multinational financial services corporation has filed a patent for a cryptocurrency system that aims to replace fiats. The United States Patent and Trademark Office (USPTO) published this patent application dubbed “digital fiat currency” on May 14. Per the publication, Visa filed this application on November 8, 2019.
Per the publication, Visa’s patent application is for a fiat-linked cryptocurrency system that leverages a private permission distributed ledger platform. The filing describes a central computer, its responsibilities, and the key roles of the system. The system would include central entities, validating entities, redeeming entities, and users.
Visa detailed that central entities may be central banks, which regulate monetary supply. On the other hand, validating entities are blockchain nodes, which may be peers such as banks. Redeeming entities would accept fiats in exchange for the digital fiat currency. These include ATMs and bank branch locations.
The crypto system could potentially leverage the Ethereum network
Explaining how its crypto system would work, Visa said the central entity computer would generate the digital currency that is recorded on the blockchain. It would also be responsible for determining whether a specific digital currency unit should be added or removed from the blockchain. The filing added that the payment system could potentially become 100% digital. As such, it would facilitate the removal of all cash from markets in a seamless manner.
While Visa has already mapped out how its crypto system would operate, it has not yet selected a consensus mechanism for the system’s blockchain.
The filing noted that,
“The consensus mechanism may vary depending on the protocol implemented. Some example consensus mechanisms … are proof of stake, Byzantine fault-tolerant algorithms, and crash-fault tolerant algorithms,”
Apart from the mechanisms above, the filing outlined that Visa may consider employing Ethereum, Hyperledger Fabric, or zero-knowledge proofs.
Visa continues becoming more crypto-friendly
This news comes after the Coinbase exchange announced that it had become a Visa principal member in February. Through this membership, Visa allowed Coinbase to add more features to its Coinbase Card such as additional services and support in more markets. As such, the cardholders got a unique opportunity of spending their crypto easily.
Apart from Coinbase, the lightning-compatible Fold app joined Visa’s FinTech Fast Track program to launch a Visa co-branded BTC cashback rewards card. Through this collaboration, Visa was set to help Fold financially and also offer a team to help bring the card into the market.
Do you think Visa’s growing interest in the crypto space might trigger the long-awaited wave of institutional players to join the crypto space? Share your thoughts in the comment section below.