Visa recently filed a patent for the creation of a crypto-based system that would replace the use of physical currency with digital tokens. The system would not replace the existing banking system. Instead, it would rely on existing central banks and commercial banks.
It would be based on a private blockchain that would help to improve the efficiency of the national payment system. According to a May 14 update by the United States Patent and Trademark Office (USPTO), the patent was filed on November 8, 2019.
Details of the Patent Filing
According to the patent filing, the crypto-based system would be linked to fiat currencies. It would operate as a private blockchain. The filing goes on to describe a central computer with specific roles and responsibilities. Amongst its responsibilities would be the validation and redeeming of users and entities.
The central computer could be a central bank, which is in charge of a country’s monetary policy. It also has validating entities, which would be blockchain entities. The nodes could be commercial banks. The redeeming entities would accept physical cash and convert it into digital cash. These redeeming entities could be ATMs or bank branches.
According to the filing, a central computer generates the currency, which is recorded on a blockchain. Besides that, it could determine whether a particular unit of currency be added or removed from the network. It could do this while at the same time removing the physical supply of a given unit of currency.
The filing goes on to say that the payment system could become digital at some point as physical cash is eliminated from circulation. Users of the system would be able to hold digital currencies as well as physical cash. It goes on to state that when a person receives a digital currency, they may transfer the digital cash from wallet to wallet or store it on a smart card. Additionally, they could transfer the smart card to another entity.
There Is No Consensus Mechanism Yet
In the patent filing, no consensus mechanism has been settled upon. It states that the mechanism could vary depending on the protocol that would be implemented. The filing gives examples of consensus mechanisms such as the crash-fault tolerant algorithms and Byzantine fault-tolerant algorithms.
Will This Lead to a Real Product?
Whether Visa goes ahead to implement the system is another issue. Major companies globally often file patents that may lie dormant for years. Sometimes, they never utilize the patents. However, they are forward-looking and they like to have the patents in place, just in case they ever need them. It ensures a smooth implementation of any system without lengthy court battles.
Visa is not the only company that has made headline-grabbing patents in the crypto sector. Recently, Microsoft filed a patent for a consensus mechanism that would rely on brain waves. However, it is unlikely that Microsoft will put a product out in the market that will utilize this idea soon.
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