Visa Files Patent For A Crypto System That Allows Central Banks Replacing Cash With Blockchain-based Digital Currencies
Payment processing giant Visa International has filed a new patent for a cryptocurrency system which can replace the physical currency. In its patent filed with the USPTO, Visa also talks about including commercial and private banks who can leverage the private blockchain networks with an overall improvement of the payment ecosystem.
The new crypto payment system would feature a system that would convert the physical fiat currency into its newly digitized counterpart. Besides, the system would also be capable of minting digital fiat currencies while maintaining a tally of all the issuances on a blockchain.
The entire system shall be managed by a "central entity computer,” as mentioned in the patent and will help to remove the physical cash from circulation. Thus, the newly created digital fiat shall be an exact equivalent to the physical cash. Besides, the denomination and serial number of the physical notes and currency shall also be transferred to the new system.
As stated in the patent, the fiat-linked cryptocurrency system shall be using “a private permissioned distributed ledger platform”. The central entity computer will have some key roles and responsibilities for the system like validating entities, central entities, remedying entities, etc.
Basically, the central computer will be a central bank which will regulate the monetary supply. On the other hand, validating entities will be blockchain nodes i.e. banks registered with the central bank. Similarly, the remedying entities will be a physical ATM location or a bank branch which will accept physical cash in exchange for the digital fiat currency.
The patent notes that once the bank issues the digital fiat currency, “A user or bank may transfer the digital currency from wallet to wallet or store the digital currency on a smart card and transfer the smart card to another entity.”
The patent notes that the cryptocurrency payment system will be 100% digital. To improve it, “cash may be removed from the markets in a frictionless manner. Users may hold digital currency with the same denomination as the local physical currency.”
The filing also details the possible consensus mechanisms used by this privatized blockchain. It states: “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”. Besides, they would also be exploring a copy of Hyperledger Fabric, Ethereum, and zero-knowledge proofs.
Speaking on this development, a Visa spokesperson said: “Visa has a vast global team of inventors and innovators working on cutting edge payment technologies. Each year we seek patents for hundreds of new ideas. 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.”