Visa payment company filed a patent application for "digital fiat currency."
On Thursday, May 14, the U.S. Patent and Trademark Office issued the Visa patent application, which was incipiently filed in November 2019. The application describes a system for combining the advantages of cryptocurrencies and traditional fiat currencies:
“Cryptocurrency systems have several advantages over fiat currency systems. For example, cryptocurrency money transfers can be faster than regular fiat currency transfers. Cryptos use blockchain and therefore have a higher level of trust since blockchains are immutable transaction records. However, despite these advantages, cryptocurrencies are generally not regulated like fiat currencies. Besides, it is not practical for governments to fully convert their fiat currency systems into cryptocurrencies since the latter requires the use of electronic devices. A part of the country's population may not have electronic devices, so the complete conversion of fiat currencies into cryptocurrencies is inappropriate.”
Perhaps the most significant difference from cryptocurrencies is that digital fiat currency involves the use of “central authority” that “supports and controls the monetary system.” According to the application, such a body may be a state currency issuer or a central bank.
The application mentions the Ethereum blockchain platform, which could become part of the project. “In some cases, the digital fiat currency can be implemented using Ethereum,” the application said. Hyperledger Fabric is referred to as another blockchain platform for possible use in such a system.
A Visa spokeswoman told Forbes that "not all patents give rise to new products or features." Christopher Giancarlo, former chairman of the US Commodity Futures Trading Commission (CFTC), said the patent application itself is proof that private companies are willing to work with the government to “reinvent the money.”
“When the US does such important things as the space program and the Internet, there are partnerships between the private and public sectors,” Giancarlo said. “This patent application shows that the private sector is doing a lot of work on the future of money.”
Visa CEO Alfred Kelly said: “I think that it could potentially become a new technology in the field of payments. In this regard, we support the argument in favor of cryptos. We believe that digital currencies can be added to the ecosystem of payments, but not become a replacement for these systems or in any way negatively affect them.”