The US Patent and Trademark Office published a patent application that Visa filed to create a digital currency.
Visa published patent for Ethereum based digital coin. The system is described as a method to digitize fiat currencies issued by central banks through blockchain technology. The Visa application was originally submitted to USPTO on November 8, 2018. However, it was made public on May 14, with the authorship of Simon J. Hurry and Alexander Pierre. The document proposes a system run by a central entity, which receives requests to generate a digital currency registered on a blockchain. The application includes the serial number and denomination of a fiat currency.
The description of this system indicates that the generation of each digital coin would cause the voiding of the other circulating currency. According to Visa’s patent, central banks anywhere could implement this method to transfer value and avoid double-spending. The fiat digital currency could be based on Ethereum, setting addresses for users, the central entity, and the transaction processing network.
The computer of the central entity receives requests for digital currency. The request includes a serial number and a denomination of physical currency. The central entity’s computer generates the digital currency for the correct fiat money and links it to a serial number.
The Role of Blockchain
The system records the digital currency on a blockchain. The central entity’s computer notifies the generation of the digital currency. The system also causes the physical currency to be removed from circulation in the fiat system.
They don’t disclose anything about the so-called central entity computer in the patent filing. And although it mentions the possibility of shared registration, it says nothing about how to validate transactions. The document does not mention if the records of the central computer or the blockchain will be public.
Visa’s patent application indicates that users use a digital wallet and public and private keys to manage digital currency. Furthermore, it suggests that the potential uses of this technology include the possibility by central banks to substitute fiat money in the form of banknotes for digital or cryptocurrencies with little friction. The US Congress recently considered using a digital dollar during the crisis.
China has also promoted projects to migrate the economy to a digital currency system. Although the e-renminbi is still in the testing phase, developers have already run tests in some regions. The international community debates whether issuing this currency could contribute to global inflation. Though the filing mentions the US greenback, another article by Forbes says that it may use an identical mechanism in different sovereign currencies like EUR or GBP.