- Visa files patent for crypto to replace fiat
- The new model uses central banks and commercial banks to improve payments
- The consensus mechanism for the new project may vary according to the protocol
Cryptocurrency News Today – Visa International has filed a patent for a cryptocurrency system that will replace physical currency. The model uses commercial banks and central banks to leverage a private Blockchain in a bid to enhance payments.
The USPTO (the United States Patent and Trademark Office) on Thursday published Visa’s patent application. The patent application is entitled “digital fiat currency.” Note that Visa (Visa International Service Association) originally filed its patent on November 8, 2019.
The USPTO Published Visa’s Patent Application May 14
Per the report, the USPTO published Visa’s patent on May 14. The filing by the Visa International Service Association is for a fiat-linked crypto system that uses a private Blockchain (permissioned distributed ledger).
It refers to a central computer, plus responsibilities, and key involvements of the system. Which include users, central entities, validating entities, and redeeming entities. A central entity can refer to a central bank (which regulates monetary supply). Validating entities can refer to Blockchain nodes, which can be tagged as banks. Redeeming entities can accept physical currency in exchange for digital fiat via an ATM or bank branch.
The central entity computer sets up the digital currency recorded on the Blockchain. It may also determine that digital currency should be included or removed from that particular Blockchain. The payment space maybe 100% digital. Cash will be removed from markets in a frictionless way. The documents add that these changes will be to improve the payment space.
The Consensus Mechanism for the New Project May Vary According to the Protocol Chosen
Note that no consensus mechanism has been chosen for Visa’s new system’s Blockchain. According to the report, the consensus mechanism will vary according to the protocol that is implemented. Some examples of consensus mechanisms include PoS (proof of stake), crash-fault tolerant algorithms, and Byzantine fault-tolerant algorithms. Other mechanisms that have been explored include Ethereum, zero-knowledge, and Hyperledger Fabric. A spokesperson for Visa on Thursday said:
“Each year Visa seeks patents for hundreds of fresh ideas. Although not all of these patents will result in new features or products, Visa respects intellectual property. The company is actively working to protect the payment ecosystem, innovations, and the Visa brand as well.”
Other companies have also tried to patent several digital currency systems. Take an example, there was a time Microsoft filed an international patent for cryptocurrency system that uses body activity data. They were granted this patent by the World Intellectual Property Organization.