Payments behemoth Visa shared its vision on implementing cross-chain interoperability between CBDCs and cryptocurrencies. However, it is questionable whether this is going to sit well with die-hard crypto supporters.
Visa getting in on the digital currency game
Visa is often brought forward as a role model in terms of transaction speed for peer-to-peer payment systems like Bitcoin. However, that also implies that Visa and cryptocurrencies are competing, which is not far from the truth. It’s thus all the more surprising that Visa revealed a conceptual protocol, showing how it envisions a multichain future where various CBDCs are interacting with each other and with cryptocurrencies as well.
The payment company calls it “Universal Payments Channel” (UPC) and sketches how Visa would facilitate transactions in the future. For instance, splitting a check with friends when everyone is using a different type of money, both CBDC or cryptocurrency, would be feasible with this solution.
The Universal Payment Channel would act like a hub, interconnecting multiple blockchain networks and allowing for secure transfer of currencies, acting as an adapter of sorts. Visa’s Head of Crypto, Guy Sheffield, sees a promising future for his company:
“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.”
Visa’s argument is that digital currencies will be a part of daily financial life and that this will concern both cryptocurrencies, as well as CBDCs. A universal payment hub would add value to money movement, and Visa already deployed a sample smart contract on Ethereum’s Ropsten testnet that shows a payment channel accepting both Ether and USDC. Ideally, the company would become a “network of blockchain networks” in this case.
Are crypto bulls going to like this?
CBDCs are not the future; they are already here, as the example of Australia shows. So is Bitcoin as a means of payment, cue El Salvador. And the future is likely going to be a multichain one. However, can all these three co-exist peacefully?
Cryptocurrency advocates will argue they can’t since CBDCs go against everything cryptocurrencies like Bitcoin stand for: decentralization, transparency, being permissionless, and censorship-resistant. At the same time, handing back power to a centralised payment provider like Visa is unlikely going to sit well with crypto supporters. After all, why would someone use cryptocurrencies in the first place if they can just keep swiping their credit card?
While the idea of having interoperability between different coins is not only intriguing but also necessary, it’s hard to believe the crypto space would endorse a solution by a legacy financial services provider. Many crypto advocates are also staunch opponents of CBDCs and would probably refuse to ever use one. It’s more likely that cryptocurrencies and government coins will continue to be on a collision course until battle lines have been drawn between crypto-friendly states like El Salvador and crypto-skeptics like China and, unfortunately, Australia.
