Visa Backs Crypto Banking Powered by Ethereum

The Crypto winter continues to get colder, mirroring the real weather as of late. 

But builders continue to build and smart investors are taking notice.
Researchers at financial giant Visa (NYSE: V) have developed a method that would enable automatic payments for self-custodial wallets on the Ethereum blockchain. They outline the details in a technical paper that was recently released. In it, a concept known as “Account Abstraction” will be capable of processing automatic payments on Ethereum.

Visa Backs Crypto Banking Powered by Ethereum
This would essentially combine a user account and smart contracts into a single Ethereum account. Much gets lost in technical jargon but this would essentially allow automatic programmable payments on Ethereum.
A novel smart contract would serve as an intermediary between a user and contract account, creating a self-custodial wallet that would make automatic recurring payments.
There are currently two types of accounts on the Ethereum network: external accounts (EOAs), which are controlled by private keys, and contract accounts (CAs), which are smart contracts. 
EOAs can initiate the transaction, CAs cannot. Account Abstraction makes it possible to create a smart contract that can initiate transactions on behalf of an EOA, leading to the creation of a self-custodial wallet that can automatically make recurring payments. 
Account Abstraction is a proposal to combine user accounts and smart contracts into a single account type on the Ethereum blockchain. This is achieved by allowing the creation of validity rules for individual transactions. One use case for AA is the creation of “delegable accounts” that can automate payments using smart contracts. 
Visa said that with delegable accounts, users can delegate the ability to initiate payments to pre-approved smart contracts, called "automatic payment contracts." 

Here's how it works: When a user visits a merchant's website and agrees to authorize automatic payments, the title of the automatic payment contract is added to the user's permission list (or allow list).
The merchant can then initiate the payment by calling the debit function of the automatic payment contract, which will cause the user account to initiate the payment, which is valid as it is whitelisted.
Voila! Instant recurring crypto payments utilizing the world’s largest payment processor. 
Why does this matter?
This process would completely cut out banks and other centralized entities. Since someone would be using their own self-custodial wallet, they would essentially be their own bank. 
This is perhaps the biggest reason for crypto to exist in the first place.
With the recent failures of various crypto banks the importance of self-custody has been reaffirmed in a major way. 

Although this technology has not yet been implemented, the fact that companies like Visa are exploring it is an encouraging sign. In fact, virtually all of the major players in finance are researching crypto and figuring out how to incorporate it.
I’m keeping my eye on the best ways to profit from this trend as we start to emerge from this crypto winter and into more pleasant weather ahead.

You can see several ways to invest in this emerging new sector, including three top coins to buy now, in my new report on the sector.

Chris Curl

Chris Curl
Editor, Daily Profit Cycle