Visa Files for a Centralized Digital Dollar Patent; Putting Fiat Currencies on Blockchain
Visa, a multinational payments service provider, has filed a patent to create a digital dollar based on blockchain tech with oversight from centralized computers. The US patent & Trademark office revealed the details of this application on May 14. However, Visa initially filed for the patent back in November 2019.
According to the publication, this idea is not solely based on the US dollar. Visa highlighted that the patent involves other currencies as well such that any central bank can smoothly transition to the digital form of its base currency. Dubbed the ‘Digital Fiat Currency', it was filed in conjunction with inventors Alexander Pierre and Simon J. Hurry.
The Digital Dollar Technical Aspect
Visa has since mentioned the possibility of leveraging Ethereum's blockchain for this development. The proposed infrastructure design encompasses two records meant to facilitate a transparent conversion from fiat to digital. One is tasked to ensure that a digital denomination has been created while the other records that a corresponding fiat amount is removed from circulation,
“…every time a dollar worth of digital fiat currency is generated, the central entity ensures that a corresponding physical dollar bill is removed from circulation, in order to regulate the value of the digital fiat currency.”
The application goes on to tout cryptocurrencies as a viable solution given the cost-friendly nature and immutability aspects embedded within blockchain ecosystems. However, Visa, did not maintain the fundamental nature of blockchain decentralization as per the application. In fact, it further suggests that the centralized entity approach could be the answer for implementing monetary policy in digital markets.
Following this approach, Visa's patent was praised by the former chairman of US Commodity Futures Trading Commision (CFTC), Christopher Giancarlo. He noted that the patent is a major statement from both private and public stakeholders in the US,
“This confirms when the U.S. does big things like the space program and the Internet, there are partnerships between the private and public sector. This patent filing is evidence the private sector is very much at work on the future of money.”
Visa's Recent Scaling in Blockchain and Crypto Activity
As the world navigates living with Covid-19, payment service providers have been on their toes to match the current needs. This has somewhat favored the crypto market which many were initially skeptical about. Visa's latest milestone within this space is the inclusion of Coinbase as one of its principal members. This alliance has seen Coinbase pioneer debit cards for crypto spending with the help of Visa. The firm also runs a FinTech Fast Track Program supporting startups within this industry based on Visa's resources.
Despite this success, the digital dollar patent does not guarantee a solution in monetary policy or regulatory oversight. A Visa spokesperson told Forbes that not every patent result in a new product but the firm strives to respect intellectual property,
“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.”