Cryptocurrencies are interesting technologies that yield huge profits for investors and aided various industries. Yet, crypto’s “currency” aspect still needs upgrades for mainstream adoption.
The credit card company Visa wants more people worldwide to use cryptos daily. Fortunately, it might turn that dream into a reality by providing auto payments for self-custodial wallets.
This article will discuss how the Visa crypto project could work. Also, we will discuss the current limitations of cryptos and how Visa could resolve them.
What are the current issues with cryptocurrencies?
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Satoshi Nakamoto intended Bitcoin, the first cryptocurrency, to replace the world’s centralized banking system.
Instead of relying on a few institutions, Bitcoin uses a decentralized computer network called a blockchain.
He claimed that it would give people full control over their finances. Nowadays, Nakamoto’s plan seems to have mostly succeeded.
We have hundreds of cryptocurrencies besides Bitcoin, such as Ethereum. Also, the technology enables many products and services like non-fungible tokens (NFT).
You may also keep bitcoin and other tokens in a crypto wallet. It could be a web browser extension, a mobile app, or a separate device known as a cold wallet.
However, the current system may inconvenience most people. To send or receive cryptos, you must provide your public and private keys to confirm transactions.
You will have to provide these details manually, ensuring that your funds will not move without your approval.
The problem is you cannot use automatic payments. Most banking apps could automatically send funds from your account to facilitate paying bills and other expenses regularly.
You could use a custodial wallet to solve the issue. It is a crypto wallet that someone else controls so that they can move tokens on your behalf.
However, you will have to entrust your funds to another person or organization. Choose the wrong custodian, and you might lose your cryptocurrencies!
How does Visa’s crypto solution work?
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The credit card company Visa is developing a solution called account abstraction (AA). It would combine user accounts and smart contracts into a single Ethereum account type.
Smart contracts are agreements that automatically execute their conditions once specific conditions are met.
The Ethereum (ETH) blockchain is the number one platform for smart contracts, so the Visa crypto project focuses on it.
The company aims to provide more flexibility in validating Ethereum blockchains by offering these features:
- Multi-owner accounts via multisig signature verification
- Post-quantum signatures for account verification
- So-called public accounts that allow anyone to make transactions
However, Visa cannot remove the hard-coded limitations of Ethereum. Also, the blockchain does not support account abstraction yet.
Consequently, the credit card firm will implement a layer-2 blockchain called StarkNet. It is a separate network that will let users create abstract accounts.
Those will check user addresses instead of their signatures when confirming transactions. Still, it allows users to maintain control over their cryptos.
As a result, it would enable auto payments for self-custodial wallets and simplify crypto transactions.
Conclusion
Crypto has been transforming many aspects of daily life, but most people still do not use it as a currency.
Fortunately, the Visa crypto project in development may change that soon. It would allow automatic payments while keeping user control over their cryptocurrencies.
However, Visa reminds people that it only shared potential features of its project. The final version may not offer all the features it described.