Visa has finally lifted the lid on its much-publicised digital currency patent, revealing that it is working on a payment solution that is interoperable with permissionless blockchains like Bitcoin (BTC). In an interview with Forbes published on Sept. 23, global fintech head Terry Angelos and head of crypto Cuy Sheffield shed light on the project scope as well as Visa’s wider cryptocurrency and digital assets strategy.
In the wide-ranging interview, the Visa executives also provided clarity on Visa’s abrupt decision to leave Facebook’s Libra consortium last year. They alluded to Visa’s vision for second level payment channels like Litecoin (LTC) as the key to scaling payments on permissionless blockchains to meet retail standards.
Visa. It’s every where you want Bitcoin to be…
— Brian Roemmele (@BrianRoemmele) May 18, 2020
“Network Of Networks”
Responding to a question about second layer scaling technologies like Litecoin, Sheffield revealed that Visa sees these layers as intrinsic to the scaling potential of blockchain payments. According to him, Visa’s internal teams are currently researching the suitability of such layers for consumer payments.
According to Angelos, Visa’s under-construction solution falls into line with Visa’s self-image as a “network of networks,” seamlessly integrating and operating across multiple permissioned and permissionless networks. This, he says, informs how Visa thinks of integrating with public blockchain networks.
Explaining further, Angelos said:
“Because we don’t think of blockchain networks as being different from a strategy perspective, to the degree that blockchain networks emerge, are legal and regulated, we can engage with them in the same way as any other network. To that end, Cuy is helping to build the product set that can interface with those networks.”
Angelos also clarified Visa’s internal position on the dichotomy between cryptocurrencies and digital currencies. According to him, Visa defines cryptocurrencies as digital assets natively issued on a blockchain, and digital currencies as tokenized fiat assets, which is where the majority of Visa’s crypto clients fall into.
Libra and CBDCs
Sheffield further revealed that Visa currently interfaces with central banks around the world on the subject of central bank digital currencies (CBDC). According to him, Visa believes that a successful CBDC framework must solve the same issues facing tokenized stablecoins including ease of use, interoperability across various digital wallets, security, and acceptance with merchants.
In his opinion, Visa’s vast experience in building highly scalable payment solutions and its existing infrastructure makes it ideally placed to help both central banks and private stablecoin issuers to solve these problems.
Responding to a question about why Visa pulled out of Facebook’s Libra consortium, Sheffield and Angelos implied that the Libra partnership was designed to be platform-specific, while Visa prefers an interoperable, platform-agnostic framework. According to Angelos, the company is not actively looking to join a consortium right now, and certainly not an exclusive one.
Buttressing this point, Sheffield said:
“[…]We see Visa as remaining currency and network agnostic. We want to support the digital currencies that our diverse set of clients demand. Therefore, part of the network of network strategy isn’t to try and just pick a winner. Rather, it’s being able to have products and services that work with many different digital currencies and networks.”
It will be recalled that in October 2019, Visa pulled out of the Libra project alongside Mastercard, PayPal, eBay, Stripe and Mercado Pago.