Visa has filed an application for a patent on its digital fiat currency project – a system that will convert fiat currencies into digital currencies.
The global payment giant Visa has recently filed an application for a patent on its digital fiat currency project at the U.S. Patent and Trademark Office.
According to its filing, Visa will be providing a “digital fiat currency system” to help manage its project that will allow users to convert fiat currencies into digital currencies.
Visa ventures into the blockchain technology, addresses problem on regulation
Visa’s filing detailed that “conventional” cryptocurrencies can offer a secure and private payment system, given that these are the benefits exclusive to cryptos.
According to the filing, Visa will make its entire ecosystem “entirely digital.” Venturing into cryptocurrency and blockchain technology will help Visa improve its thrust to promote a cashless payment ecosystem, it details.
Developing the project, Visa noted, will help them enable a digital fiat currency that can quickly process and finalize transactions “without requiring settlement and clearing processing.”
In other words, this innovation will create a payment ecosystem that can allow users to immediately exchange their fiat into digital currencies.
Through this system, users can store their funds in digital currencies. These funds will also represent an equal amount in fiat currency should they wish to perform transactions.
Visa to continue employing KYC-compliant mechanisms
In this payment system, users can transact with the utmost privacy using digital currencies. However, since transactions are recorded in the blockchain, Visa recognizes that they can still be traceable.
In compliance with regular know-your-customer (KYC) procedures, Visa noted that they can require users to provide relevant personal information before they can participate in transactions within its digital currency platform.
Visa will work with local central banks to enable the withdrawal of funds in its digital currency platform. In the filing, central banks are referred to as “central entities.”
According to Visa, central banks will still have exclusive rights to create or demonetize currencies if needed.
They highlighted that Visa’s introduction of a digital currency will, in no way, step on the role of the central banks’ to mint or create currencies in circulation.
Additionally, Visa will work with central banks in recording banknote serial numbers and denominations to ensure that they will not suffer from duplicate banknotes.
This way, Visa can ensure that they do not pose risks of replacing fiat currencies in any country’s financial ecosystem.
Visa’s digital fiat currency project is a significant foray into the blockchain ecosystem. With its new project, people can potentially reap the benefits of a blockchain-based transaction system that can create a more secure payment system.