Visa has a new proposal that will enable what is known as “interoperability between central bank digital currencies (CBDCs) with other stablecoins.” This comes as a result of the various researching and testing of CBDCs by many countries around the world, while the private sector has simultaneously raced ahead with competing fiat-backed stablecoins.

The big question in the lips of many has always been if the 'different systems of stablecoin would be able to interface with each other.' The independent market participants, regardless of whether they are states, national or private companies, have very little if there is any incentive to create this interoperability. This turned the table of conversation to the large payment players such as Visa, that stood to benefit by serving as or becoming an integrator of all types of stablecoins and CBDCs.

This is what Visa is proposing using their new system. Any stablecoin or CBDC will then be able to be used with other stablecoin or CBDC as long as it interfaces through using Visa’s system. I have no doubt to say that I am a fan of what the Visa team is doing, and have been incredibly impressed by their open-mindedness when it comes to this new industry, but this new system feels like a re-creation of the legacy centralized system.

According to Coindesk,

“the UPC protocol will allow payments through an entity known as the ‘UPC Hub’, acting as a trusted gateway to read the state of two ledgers, checking the eligibility of every payment.”

And according to Visa,

“the UPC technology can play an important role between private stablecoins and public CBDCs by providing permissioned access for whitelisted stablecoins to be interoperable with CBDCs.”

This proposal by Visa creates a middle or third party clearing house for all transactions, and at the same time also re-creating a new permission system or mechanism. The technology hereby becomes more superior to the legacy technology. This fact is not denyable, but it doesn’t change the way payments are done. It is just an evolutionary approach to payments, rather than a revolution.

It then becomes obvious why the big banks and other financial firms want to use evolved payment technology. This will helps them to continue to protect and secure their dominant market position, though the future is not rooted in evolutionary advancement. That revolution is what will propel us forward.

The Payments method is today entering a period of weird and aggressive transition. No wonder the centralized entities and other third party clearing houses want to continue in the way things are as much as possible simple because their businesses depend on it. The big players are poised to leverage on decentralized systems that treat everyone the same and require no one’s permission to use. While it is easier to see a centralized future, mainly because it is most like the past, the future will be decentralized.

Having said that, Visa’s move here is forward thinking when compared to their peers. Most companies are still denying the value and the potentiality of these new technologies. Visa now is attempting to carve out a unique position of importance for themselves thereby sitting at the hedge of intersection of all stablecoins and of course, CBDCs is a pretty great place to stake your claim.

I bet us to keep our eye on this as we move forward. The present players will continue to embrace the evolutionary technology. The regulators will be much more comfortable with it both in the short term and medium term. But the long game here is a decentralized digital currency that is or will be controlled by no one, accepting of everyone, and can’t be manipulated by central banks or nation states.