- Payment giant Visa has submitted a patent application concerning the creation of digital currencies on centralized computers
- According to the filing, the technology aims to address central banks’ concerns about digital dollars by giving them control over the currency’s volume and value.
Visa has filed a patent application for a "digital fiat currency" that points to a use case for central banks.
The proposed invention is pitched as a way to bridge the advantages offered by cryptocurrencies with those provided by traditional, government-issued ones. As the application explains:
"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."
"Embodiments of the invention address this and other problems, both individually and collectively," the filing adds.
Yet in what is perhaps the biggest departure from the cryptocurrency framework, the digital fiat currency employs a "central entity" intended "to maintain control over the monetary system." The filing explains that such an entity could be a governmental issuer of currency or central bank.
"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," the filing explains.
The application also includes eleven mentions of Ethereum. Indeed, it indicates that Ethereum could form part of an implementation of the invention. Hyperledger Fabric is almost mentioned as another blockchain platform for possible use in such a system.
A Visa spokesperson told Forbes that "not all patents will result in new products or features." But J. Christopher Giancarlo, Former Chairman of the U.S. Commodity Futures Trading Commission (CFTC), argued that the patent application itself is proof that private enterprises are willing to work with the government to reinvent how money works.
"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," Giancarlo was quoted as saying. "This patent filing is evidence the private sector is very much at work on the future of money."
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According to the filing, the technology aims to address central banks’ concerns […]