VISA To Digitalize Paper Money Bills On Blockchain
Visa is well known for its cross-border financial systems, and the introduction of blockchain-powered financial models don’t seem to bother Visa from maintaining its role as the spearhead of the fintech industry.
Visa needs no introductions when it comes to economic influence, and although the micropayment giant is considered a gear of the traditional financial system, Visa doesn’t hesitate to consider and therefore adopt fintech innovations, including decentralized distributed ledgers.
It wasn’t before Chinese payment processors such as AliPay, and WeChat, as well as Facebook’s announcement of its own venture towards a global digital currency when Visa joined the digital currency trend actively, although the popular payments platform had previously offered infrastructure solutions for various crypto-related brokers and financial institutions who sought a system to spend crypto as easy as spending plastic money.
A 2018 filing with the US Patent and Trademark Office that surfaced recently subjects the tokenization of fiat currencies not as a pegged collateral backing a cryptocurrency, but instead as registered ownership tokens that would be backed by unit-specific paper bills, which according to the document will be destroyed in the process.
The concept is to transfer the current amount of fiat currencies in circulation into the digital realm with immutable integrity, possible thanks to blockchain technology’s networking architecture. Basically each paper bill shall become a unique digital token that represents the respective bill itself.
Details of the process include the verifiability of the paper bills and their “burn” off the physical domain after their registration on-chain. On its own turn, this will enable a tracking history scenario where central monetary authorities could follow “where the money go” (verse from popular trap song).
While Visa being the savior of digital money is not something we’ve dreamed of, I don’t see how this is a bad idea, considering that entering the blockchain finance realm involves a process of mirroring due to the succession of two simultaneously active economic systems.
For example, if you buy $100 worth of Ether (ETH) today, you can spend your ETH as seen fit, while your broker or crypto bank will be eligible to spend the $100 bill in a regular fashion. If that doesn’t ring a bell, we’ve just spent $200 worth of physical and digital currencies with only one $100 bill.
In VIsa’s case, that seems to be the core issue subjecting cryptocurrencies to vague and volatile speculations, while a truly stable virtual currency would be only possible if we destroy the fiat that feeds its existence after the digitalization process
What’s caught to the eye is the fact that Ethereum was mentioned 11 times in the paper as a part of various examples, but it can be also interpreted as a sign Visa is considering the Ethereum blockchain as an ideal layer to deploy such as use-case.
Earlier this year, IBM revealed that Hyperledger Besu, an enterprise-level blockchain based on the Ethereum will offer custom solutions for state-backed digital currencies, although it is yet unclear whether Visa plans on its own blockchain or keen on leveraging the Ethereum network.
Last but not least, Visa’s filing with the USPTO describes what they refer to as a “central entity computer” which will supposedly act as a monetary supervisor, making sure that the system is nominal.
Besides USD support, Visa suggests that it will be easy enough to replicate the process for foreign national currencies as well, which appeals to the use of Hyperledger’s new feature.