Visa filed a patent for central banks to print fiat currency digitally using blockchain technology. With this move, the multi-national payment solution is anticipating a move of government-backed fiat currencies to the blockchain. While this is a bold technological move, it is counter to Satoshi Nakamoto’s original vision for crypto and blockchain technology.
Crypto is Supposed to be Decentralized, Free From Government and Corporate Control
Bitcoin and other cryptocurrencies can be mined by individuals and companies at-will. Though proof-of-work digital currencies like Bitcoin are becoming too expensive to mine due to electricity costs, people are free to produce them. They are free from government control (though regulations are getting in the way), and the market determines their value. Furthermore, cryptos like Bitcoin have a known cap on their total volume.
Contrast this with government-backed fiat currency. Money printed by governments (and central banks) has no cap. Nobody knows exactly how many dollars, or Euros, or any other currency remains in circulation. Keynesian economics, government policies, and threats of violence are important factors in determining the value of any fiat currency. For example, when the US dollar was taken off of the gold standard, it moved to the “petro dollar.” With this move, countries around the world must sell their oil for US dollars, effectively giving the fiat its value. When they do not comply, they face the threat of trade sanctions, wars, and other negative outcomes.
Patents are Counter to the Spirit of Crypto
Intellectual property is an artificial construct. Bitcoin and other decentralized cryptocurrencies are effectively driven by open-source encryption algorithms. As such, patents are not compatible with the original intent of a decentralized currency. Note that this is not Visa’s first experiment with crypto. For example, a bank in Thailand tested a Visa blockchain solution for cross-border transactions. But, it is a significant move by the mega-corporation.
What This Means for Crypto
In a way, this move by Visa to enter the crypto space with fiat currency may be good for decentralized digital currencies and blockchain technology. It shows a level of trust in the method of encrypting value that is unprecedented. The outcome may be more stable pricing in the crypto markets.
What a Visa Patent on Fiat on the Blockchain Means for Monetary Policy
This is a tricky question. One outcome may be a better sense of the true value of a given currency, and a reduction in counterfeiting. A negative outcome may be that governments will be able to track every cent of your spending. This is more or less possible today, with the widespread use of credit cards, debit cards, and bank transfers. However, paper money still exists, and with it, there still exists a small degree of personal privacy. Were we to move to a cashless society, privacy would be all but extinct. For these reasons, privacy activists like John McAfee continue to push for decentralization.
Seymour Nunez is a contributing writer for Cash Tech News who enjoys writing about the intersection of blockchain technology and everyday life.
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