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The U.S. Patent and Trademark Office (USPTO) published today that Visa has filed a patent application to create digital currency on a centralized computer using blockchain technology. This patent applies to digital dollars as well as other central bank digital currencies such as pounds, yen, and euros and so the physical currency of a central bank anywhere in the world could be digitized.
Described as ‘Digital Fiat Currency’ the patent was initially filed by Visa on November 8, 2019, with the USPTO commenting today, “It takes quite a while…” to publish the filing of a patent. Visa’s patent is described as a central entity computer that receives requests that include the serial number and denomination of a physical currency. The creation of the digital currency and the removal of the physical currency from circulation in a fiat currency system is recorded on a blockchain.
“Visa has a vast global team of inventors and innovators working on cutting edge payment technologies. Each year we seek patents for hundreds of new ideas,” says a Visa spokesperson. “While not all patents will result in new products or features, Visa respects intellectual property and we are actively working to protect our ecosystem, our innovations and the Visa brand.”
J. Christopher Giancarlo, Senior Counsel at Willkie Farr and Gallagher and former Chairman of the U.S. Commodity Futures Trading Commission, commented on Visa’s patent filed with the USPTO: ‘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.” Giancarlo has been very active at the virtual ‘Consensus Distributed’ conference this week hosted by Coindesk.
Congress considered the idea of a digital dollar when debating the CARES Act, the third COVID-19 relief package. Although the digital dollar was not included in the final legislation, separate bills have been introduced in both the House and the Senate that looks to legally create a digital dollar at the Federal Reserve and also a digital dollar wallet at the U.S. Treasury. The digital dollar was suggested to provide economic stimulus benefits and possibly universal basic income to Americans.
The full abstract of the patent filed by Visa is described as, “Techniques are disclosed which include receiving, by a central entity computer, a request for digital currency. The request includes a serial number and a denomination of a physical currency. The central entity computer generates the digital currency for the denomination and linked to the serial number.” Visa’s patent goes on to state, “The generating includes recording the digital currency on a blockchain. The central entity computer transmits a notification of the generation of the digital currency. The central entity computer causes removal of the physical currency from circulation in a fiat currency system.” An image of the patent filing is listed below.
The patent lists the applicant as the “Visa International Service Association,” in San Francisco, CA and notes the inventors as Simon J. Hurry and Alexander Pierre. The patent further describes the workings of a digital wallet and a blockchain. The digital wallet includes a public and private key pair, while the blockchain is described as including a “…plurality of blocks, [with] at least one block, of the plurality of blocks, storing data for a plurality of transactions…including a first record indicating that the digital currency for an amount associated with the denomination has been created [as well as] … a public key associated with a digital wallet”.
The second record in the blockchain describes “… recording the removal of the physical currency from circulation.” A schematic including the front end, middleware, and back end of the invention is below.
Visa’s Crypto and Blockchain Ventures
Visa has made previous major announcements, keeping a close eye on the cryptocurrency and blockchain ecosystem. Last year, Visa was originally announced as a member of the new Libra Association established by Facebook until it withdrew in October, along with a number of other companies. Also, in June of last year, Visa announced it was entering the $125 trillion cross-border, business-to-business (B2B) transactions market using distributed ledger technology to make payments faster, cheaper, and more transparent. The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, a Belgian organization started in 1973 with 11,000 financial institutions, currently serves 11,000 financial institutions conducting B2B transactions, however, SWIFT has been criticized for its legacy systems and inefficiencies.
Additionally, in February of this year, Visa announced it had granted permission to Coinbase, a cryptocurrency exchange, permitting them to issue a debit card where individuals could spend their crypto through the card.
The full application for the patent by Visa is listed below.