Visa has filed an application for a patent that sets out a way for a central bank to take fiat money that is currently in circulation, digitize it, remove the converted physical currency from circulation and then enable consumers and merchants to conduct transactions using a digital wallet “stored on a chip of a smartcard or a secure element of a user device”.
“Techniques are disclosed which include receiving, by a central entity computer, a request for digital currency,” the patent application explains. “A central entity may be a central bank, which regulates a monetary supply.”
“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 links to the serial number. 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.”
“Embodiments provide a private permissioned distributed ledger platform for managing the digital currency,” the patent adds.
“The digital currency may be recorded to a blockchain in association with data such as a serial number of a corresponding physical currency, allowing a central entity to manage the volume and value of the digital currency.”
“In some embodiments, the method may further include associating the digital currency with a digital wallet using a private key stored to the digital wallet,” the patent application says. “In some embodiments, the private key of the digital wallet is stored on a chip of a smartcard or a secure element of a user device.”
In other embodiments, “the method further includes receiving, by the blockchain node, a request to record a transaction between a first user and a second user, the request including a public key of the first user, a public key of the second user, and a transaction amount; recording a record of the transaction between the first user and the second user, the record of the transaction including a public key of the first user, a public key of the second user, and the transaction amount in a block along with the action relating to removal of physical currency with a denomination from a fiat currency system to the blockchain.”
Visa was also granted a patent earlier this month for a detokenization system that enables an asset locked in token format to be redeemed, Coindesk reports.