Published: May 19th, 2020
The U.S. Patent and Trademark Office (USPTO) has acknowledged receipt of an application by Visa Inc. to create a digital currency. The said innovation will be laid on a centralized computer but built using the blockchain technology. The patent refers to digital dollars and other central bank digital currencies (CBDCs) such as pounds euros and yens. In doing so, Visa is demonstrating that currencies of central banks can be digitized.
USPTO on Thursday, May 14 published a patent that Visa Inc. filed in November 2019. The said application illustrates the desire of the American financial services provider to develop digital fiat currency. Visa Inc.’s patent is defined as the central entity computer in charge of receiving requests that include among other things, denomination and serial numbers of physical currencies.
The system will create and record digital currencies in the network and eliminating the corresponding physical money circulating in the fiat currency system. The resulting records of the transactions shall then be maintained in a blockchain.
In a nutshell, the giant credit card company wants to create a system that converts physical dollars as well as other major fiat currencies into their digital versions. The system will come complete with the compatible denominations and their serial numbers. The main aim of Visa Inc.’s project is to make monetary transactions a lot more convenient by eliminating paper currency.
According to Visa Inc., the system will run in collaboration with central banks which it refers to as central entities. Such a collaboration is only appropriate especially considering that only central banks hold the responsibility of injecting money into or removing currencies from circulation.
Visa Inc. was quick to downplay the possible repercussions of the patent application. According to the company’s spokesperson, not every patent application presented before USPTO gets a nod and result in a new feature or product. The company said, however, it has an elaborate global team that works almost entirely on innovation and inventions. The team is responsible for the hundreds of ideas that Visa Inc. churns out every year.
By filling the application for a patent, the company is simply taking care of the ecosystem in which it works and expressing its respect for intellectual property. Visa Inc. added through the spokesman that it will continue spearheading innovation regardless of the outcome of this patent application.
While the card company was busy playing down their innovations, industry experts think that Visa Inc. should gloat. Christopher Giancarlo who headed the U.S. Commodity Futures Trading Commission and is now a senior counsel at Willkie Farr and Gallagher says that the patent filing confirms that the U.S. does a lot of monumental things in conjunction with both the public and private sector. Citing examples of the internet and the space program, Giancarlo said that collaborating in the future of money is another demonstration of how much governments can achieve when they foster private-public partnerships.
While debating the Coronavirus Aid, Relief, and Economic Security (CARES) Act that recently made $2 trillion available to American workers and their families, Congress considered introducing the digital dollar to ease the process of distributing money.
Though the final legislation had no element of the digital dollar, both the senate and congress have received several bills that seek to make legal pathways for creating the digital dollar. The bills provide provisions for creating the digital currency both at the Federal Reserve level and as well as at the level of the U.S. Treasury.
The overall suggestion of the bill is to use the digital currency to disburse the approved economic stimulus benefits as well as the universal basic income for the citizens of Uncle Sam.
The full abstract of the application that Visa Inc. applied describes the project as a technique that applies a central entry computer to request and receive digital currency. The said request comes with the digital currency in question complete with its corresponding serial number. The computer then makes the corresponding digital cash out of the information derived from the physical currency system.
Visa Inc.’s patent abstract goes on to say that the central entry computer also records the digital currency’s transaction in the blockchain as part of the generation process. Besides, the entry computer transmits the detail of the generation.
Upon receipt of the transmitted message, the central bank in question then removes the physical currency from circulation.
According to the patent information, Visa International Service Association is the applicant while Alexander Pierre and Simon Hurry are the inventors.
This innovation whose patent application is not the first attempt by the credit card company to jump into the deep end of the blockchain ecosystem. Last year, the company announced that its interest in Facebook’s Libra Project.
Visa Inc., however, withdrew its interest in the project in October when it became apparent that the Libra Project’s persistent problems regarding meeting the demands of the oversight authorities would take long to sort out.
In June 2019, Visa Inc. developed B2B Connect, a payment solution project anchored on the Chain’s Blockchain technology. The project was the credit company’s first major dive into the $125 trillion cross-border B2B transactions ecosystem. Visa Inc.’s angle include uses the distributed ledger.
So far, the key player in this space has been the Society for Worldwide Interbank Financial Telecommunication (SWIFT) whose legacy system has come under attack for its inefficiencies.
Earlier in February, the card giant announced that it was collaborating with Coinbase, a cryptocurrency exchange to allow the exchange’s users to expend their cryptocurrency holding via their Visa debit cards.
The U.S. Patents and Trademark Office has acknowledged the receipt of Visa Inc.’s application for a digital dollar hedged on the blockchain. Through the project, the giant credit card company seeks to work with central banks to create efficiency in the transaction space by eliminating physical fiat currency and replacing it with digitized cash. It is not the first time Visa Inc. is using blockchain technology to foster innovation in the payment services space.