Visa has filed a patent application for a cryptocurrency system, which is designed to replace cash. Digital currency should be issued on the blockchain.
The United States Patent and Trademark Office (USPTO) published a patent application called Digital Fiat Currency, filed by Visa on November 8, 2019. The patent application describes a digital currency pegged to fiat money and using a “private permissioned distributed ledger platform for managing the digital currency”. According to the documentation, there will be central entities in the system, validation entities, and redeeming entities. “A central entity may be a central bank, which regulates a monetary supply,” the document says. Validating entities “are blockchain nodes, which may be peers such as banks,” that may include functionality to validate transactions. Redeeming nodes “may be an Automated Teller Machine (ATM) and/or a bank location” and may accept physical currency for exchange for digital fiat currency.
The central node computer generates a digital currency, which is recorded on the blockchain. The central node can determine that a particular unit of digital currency should be added or removed from the blockchain.
The application explains that the payment ecosystem can become 100% digital, and “cash may be removed from the markets in a frictionless manner” to improve the payment ecosystem. Users will be able to store digital currency with the same denomination as cash.
A digital currency system can use various consensus mechanisms depending on the required parameters. “The consensus mechanism may vary depending on the protocol implemented. Some example consensus mechanisms, described further below, are proof of stake, Byzantine fault tolerant algorithms, and crash-fault tolerant algorithms.”