Visa Is Building A Concept For CBDC Payment Channel On Ethereum
Visa has been actively engaging in crypto. The latest news is that the payment facilitator and financial services giant has deployed it’s first smart contract on Ethereum Testnet.
Payments giant Visa has taken a step toward achieving its vision for central bank digital currencies (CBDCs). It has developed a concept that shows how various CBDCs can be interoperable with each other to make payments.
‘Universal Payment Channel’
The company is showing clear investment in becoming a leader of payment processing through central banks via crypto. Visa’s first smart contract deployment was a payment channel accepting both Ether and USDC. This is a conceptual protocol in development by the payment processor that will enable interoperability between central bank digital currencies (CBDCs), called a “Universal Payment Channel,” or UPC.
The concept outlines how various blockchain networks can be interconnected to allow the transfer of CBDCs. It shows how Visa can help exchange various CBDCs built on different blockchains in the future.
The timing is appropriate given the global discussion around CBDCs. This week alone, Nigeria is looking to be the first country in Africa to launch a CBDC, the Bank of England has released it’s CBDC forum members, and New Zealand’s Central Bank has sought public feedback on CBDCs. Of course, the biggest story in the speculation is China’s recent bitcoin ban paired with rumors of the country’s exploration of a ‘digital yuan.’ Through it all, it’s safe to say that crypto and centralized currencies are at the forefront of most countries treasury departments lately.
Visa’s head of crypto, Cuy Sheffield, commented:
“This is a much longer-term future thinking concept around a way that Visa could potentially help become a bridge between one digital currency on one blockchain and another digital currency on another blockchain.”
Smart Contracts and NTFs
Visa has also deployed its first-ever sample smart contract on Ethereum’s Ropsten testnet. The smart contract shows a payment channel that accepts both ether (ETH) and the USDC stablecoin.
“UPC’s specialized payment channels would be established off the blockchain and leverage smart contracts to communicate back with the various blockchain networks, delivering high transaction throughput securely and reliably and improving speeds overall.”
Ultimately, Visa aims for UPC to serve as a “network of blockchain networks” to move digital currencies around.
In August, Visa purchased a CryptoPunk and released a positive perspective around NFTs. And at the midpoint of 2021, the company shared that over $1B had been spent on crypto-linked Visa cards on the year. Through it all, Visa has shown a clear favorite in Ethereum as well, and now is utilizing the chain once again with the Universal Payment Channel. The company’s clear engagement with Ethereum could prove fruitful to establishing further institution buy-in for the blockchain.
In the corresponding UPC research and insights report released by Visa, the company shows a clear desire to be a “network of blockchain networks” for global transactions. Digital asset tracker 21Shares has described Ethereum as “the most significant single innovation within the cryptoasset and blockchain industry since the creation of Bitcoin in 2009.” Should Visa’s UPC be built on the backbone of Ethereum? There’s good reason to be optimistic looking forward.
