Payments giant Visa has filed a patent application for a system that could create and manage a variety of digital currencies.
Filed on November 8, 2019, the patent was published by the U.S. Patent and Trademark Office on Thursday.
The filing reveals the extent of the private sector’s interest in overhauling the current banking system. It spotlights cryptocurrency, noting weaknesses and strengths.
“Examples of a cryptocurrency network may include networks of computers that manage any suitable cryptocurrency including, but not limited to, Bitcoin, Litecoin, Ethereum, Zcash, Dash, Ripple, and Monero.
Cryptocurrency systems have advantages over fiat currency systems. For example, cryptocurrency money transfers can also be faster than conventional fiat currency money transfers. Lastly, because some cryptocurrencies use blockchains, such cryptocurrencies are often trusted since blockchains are immutable records of transactions.
While cryptocurrencies have advantages, they are generally not subject to regulation like fiat currencies. Further, it is not practical for governments to wholly convert their fiat currency systems entirely to cryptocurrencies, since cryptocurrencies require the use of electronic devices. Some segment of the population of a country may not have electronic devices so a complete conversion of fiat currencies to cryptocurrencies is not practical.”
Visa’s remedy is to build a system that generates and manages centralized digital versions of multiple fiat currencies, including US dollars and British pounds.
According to the filing, Ethereum could be used to implement certain aspects of the technology. Unlike true cryptocurrencies, however, Visa’s patent describes a centralized entity.
The method involves a digital central currency that is recorded on the blockchain while the “central entity computer” removes the corresponding physical currency (fiat) from circulation.
The patent states,
“A ‘central entity’ may refer to an entity that regulates something. A central entity may be a central bank, which regulates a monetary supply. A central entity may implement a monetary policy and issue currency. A central entity may maintain exclusive rights to create or destroy currency in a region such as a nation. A central entity may be associated with a government of such a region.”
Earlier this year, Visa acquired fintech firm Plaid for $5.3 billion in a bid to bring more valuable services to financial institutions and consumers.
Plaid bridges customer bank accounts to financial apps such as Venmo and Betterment.
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