Visa has filed a patent application for a “digital fiat currency” system that could be used by central banks if it’s ever created. The proposed system could bridge the advantages offered by cryptocurrencies with those provided by fiat currencies.
According to a patent filing published by the U.S. Patent and Trademark Office (USPTO), first reported on by Forbes, Visa’s system recognizes the advantages of cryptocurrencies, but claims it isn’t practical for a government to convert its fiat currency system to a cryptocurrency because these require electronic devices, which a segment of the population may not have.
It does admit there are several advantages associated with cryptocurrencies:
Cryptocurrency systems have advantages over fiat currency systems. For example, cryptocurrency money transfers can also be faster than conventional fiat currency money transfers. Lastly, because some cryptocurrencies use blockchains, such cryptocurrencies are often trusted since blockchains are immutable records of transactions.
Visa’s digital fiat currency system addresses this and other problems, according to the filing. According to it the digital fiat currency would see a central entity “maintain control over the monetary system.” Such an entity could, for example, be a governmental issuer of currency or a central bank.
The application mentions Ethereum, the second-largest cryptocurrency by market capitalization, several times. Speaking to Forbes a Visa spokesperson claimed that “not all patents will result in new products or features.” J. Christopher Giancarlo, former Chairman of the U.S. Commodity Futures Trading Commission (CFTC), argued that the patent if proof private enterprises can work with government to reinvent money.
He was quoted as saying:
This confirms when the U.S. does big things like the space program and the Internet, there are partnerships between the private and public sector. This patent filing is evidence the private sector is very much at work on the future of money.
Alfred Kelly, Visa’s CEO, said during the J.P Morgan TMC Virtual Conference that he sees virtual currencies backed by a fiat currency as a potential emerging payments technology.
Featured image via Pixabay.