Visa Universal Payment Channel: One Network to Rule Them All?
Last week, Visa (NYSE 🙂 announced its plans to launch a fundamental transaction network that promises to enable cross-border and cross-technology money transfers at scale and at speeds similar to current credit card payments, which is in the tens of thousands per second. What’s new is that it is designed to be independent of geographies, currency types, or currency technologies.
It’s called the Visa Universal Payment Channel (UPC), and the company says that once implemented it will eliminate virtually all friction between money transfers. So if you are in Australia and you want to send your mother in the UK an amount of the cryptocurrency via Visa UPC, you can convert it to whatever currency you want, say sterling, before it reaches your decentralized wallet. .
That exact transaction path would be difficult to execute at this point, but Visa says your UPC will be able to handle it, and thousands of others, in seconds. In a corporate blog post, Visa predicts that the number of currencies and exchange methods will only increase in the future:
“As the number of digital currency networks increases, each with unique design features, the likelihood that consumers, businesses and merchants will transact on the same network and use the same type of money decreases.” The company saw the need for an interoperable financial backbone that runs under all blockchains, traditional finance, and central banking systems to harmonize the different cascades of currencies into a single ecosystem that enables users to transact across its terms. This graphic shows what the network will likely look like with Visa UPC in the center.
Visa maintains that its UPC center will connect different economies, geographies and blockchain networks by establishing dedicated payment channels between them. It is positioning itself as the penultimate network that will seamlessly add new trusted blockchains to its “network of networks” by creating new payment channels within the UPC hub.
Visa’s announcement says it’s not just about cross-pollination of coins across any technology and network, it’s about speed, too. They accurately point out that modern credit, debit, and remittance networks handle tens of thousands of transactions per second, yet the largest crypto blockchains, and Ethereum, can barely handle a fraction of that volume. To speed things up, UPC’s specialized payment channels would be off-chain while simultaneously communicating with on-chain smart contracts, delivering high transaction throughput in a secure and reliable manner while improving speeds in general in blockchains. It’s almost like taking a high-speed detour around traffic jams.
While this development appears to be a good way to drive mass adoption and normalize cryptocurrencies, Visa’s announcement did its best to talk about how it will be perfect for central bank digital currencies (CBDCs), which are basically fiat dollars not. ciphers produced by those same central banks. Visa appears to be toying with this government-focused audience to spur adoption of CBDC and reduce reluctance to create digital reserve currencies. We will have to wait and see what this means for the rest of us crypto.
On the other side
- We must proceed with caution here, because in one fell swoop Visa designated itself as the supreme and unifying force of all networks. The UPC places all blockchains, banking and finance at a subordinate level to Visa.
- Visa will be the intermedius maximus if this is widely adopted.
- This is an ambitious attempt to take over and centralize blockchains through a massive and innocuous takeover. Do not be fooled.
Why should you care?
Remember that it was poorly managed monetary policy, predatory lending practices, reckless legislative spending, and hypocritical bailouts for Big Banking and Fat Financing that sparked the creation of Bitcoin after the global economic collapse in 2008. Do we really want to subjugate blockchain and crypto to the same? ? power moguls again ???
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