Global payments giant Visa signaled its stronger, sustained interest in crypto on Monday, releasing a paper outlining how the firm could one day collaborate with the Ethereum network on automatic payments.
The paper, sparked by an internal company hackathon held earlier this year, details how Ethereum users could—with support from Visa—schedule auto-payments sent from self-custodial crypto wallets. Such capability is not yet possible on the Ethereum mainnet, but would be enabled by a popular Ethereum proposal called “Account Abstraction,” which would allow Ethereum user accounts to function like smart contracts and feature pre-scheduled execution functions.
Though crypto auto-payments would not necessarily have a dramatic impact on the banking and payments landscape, it’s a further sign that Visa is planning on becoming an active player in crypto, a sector it sees as potentially critical to the long-term future of payments.
“We want to have an opportunity to actively contribute to technical developments happening in the crypto ecosystem,” Catherine Gu, Visa’s Head of CBDC and Protocols, told Decrypt. “The best way to do that is learning by doing—actually getting deeper into Web3 infrastructures and blockchain protocols, areas I think are going to be really important for payments.”
Gu’s group, first organized to look into the potential of digital currencies backed by world governments, is now actively investigating what other blockchain technologies are poised to reshape the world of payments—and how soon their adoption could be implemented.
That day doesn’t seem, in Gu’s opinion, to be particularly close.
“This technology is very nascent right now, but there could be something there down the road,” Gu said. “A lot of research needs to be done around fundamental aspects important for payments, like security and scalability.”
An enduring, elusive goal for blockchain networks like Ethereum has long been scalability: the ability to maintain network security while allowing for cheap and instant transactions on a mass scale. Many anticipated updates to the Ethereum network are focused on tackling this problem. Proto-danksharding, for example, is an early version of a system that could one day radically reduce the amount of data needed to be securely analyzed to process huge swathes of Ethereum transactions. It is expected to launch some time later next year.
“From a payments standpoint, most [blockchain networks] are not yet scalable enough to process transactions at a really high speed in a secure and trusted way,” Gu said.
Until networks like Ethereum can extensively scale, it’s unlikely they will be meaningfully integrated by major firms like Visa. But the payments company, which has been in regular communication with Ethereum’s core developers, is optimistic that such technological horizons are within reach.
That optimism offers a marked departure from the grimness of current mainstream sentiment on crypto, dominated in the last month by the continually unfolding demise of crypto exchange FTX and its disgraced founder, Sam Bankman-Fried.
“It’s very important to figure out what’s the signal and what’s the noise,” Gu said. “We’re taking a much longer-term perspective on this technology. It may have real utility, and that’s why we’re here: to invest more, to do research.”
In October, the firm filed trademark applications indicating it was mulling a crypto wallet and a metaverse product. A month later, Visa pulled the plug on a partnership with FTX that allowed users of the crypto exchange to obtain Visa-branded debit cards.
That same month, rival payments firm Mastercard teamed with crypto trading platform Paxos to launch crypto trading for banks.
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Sourced from decrypt.co.
Written by Sander Lutz on 2022-12-20 00:03:45.
