Visa Eyes Automated Crypto Payments: Say Goodbye to Manual Transfers for Bills

Tired of manually approving every crypto transaction, especially for recurring bills? Imagine a world where your crypto wallet automatically pays your electricity, internet, or streaming subscriptions, just like your traditional bank account does. Sounds futuristic? Well, Visa, the payments giant, is working to make this a reality. Let’s dive into how Visa is planning to bring the convenience of automated payments to the world of cryptocurrency using blockchain technology.

The Problem: Crypto Payments Aren’t Always User-Friendly

While cryptocurrency offers amazing benefits like decentralization and control, making regular payments can be a bit of a hassle. Currently, most crypto wallets, especially self-custodial ones, require you to manually authorize each transaction. Think about it – you have to log in, confirm details, and sign off every single time you want to pay a bill. This is quite different from traditional banking where you can set up automatic payments and forget about them. Visa highlights this gap, noting that:

“Owners of self-custodial wallets can’t use such a system because ‘engineering work’ is needed for automated, programmable payments that pull money from a user’s account at set times.”

Why is this the case? It boils down to how self-custodial wallets work. You, and only you, hold the private keys. Smart contracts, the backbone of many crypto applications, can’t initiate transactions from your wallet without your explicit permission for each one. This is a security feature, but it creates friction for automated payments.

Visa’s Solution: Delegable Accounts and Account Abstraction

So, how does Visa propose to bridge this gap? Their answer lies in a concept called “delegable accounts” built upon “Account Abstraction” (AA). Let’s break these down:

• Account Abstraction (AA): This is the core idea, championed by Ethereum co-founder Vitalik Buterin back in 2015. Imagine merging the functionalities of your Ethereum wallet and smart contracts into a single, more versatile account. AA aims to do just that, unlocking a range of possibilities, including automated payments.
• Delegable Accounts: Visa envisions using AA to create “delegable accounts.” Think of these as self-custodial wallets that can act like smart contracts. This means you can program them to execute specific actions automatically under certain conditions, like paying a recurring bill on a set date.

In essence, Visa is suggesting making your self-custodial wallet smarter and more programmable, allowing it to handle automated tasks without compromising security or self-custody.

How Would Automated Crypto Payments Work?

Visa’s proposal leverages the power of Account Abstraction to enable scheduled transactions. Here’s a simplified look at how it could function:

1. Set up programmable instructions: You would set up instructions within your delegable account, specifying the recipient (e.g., your electricity provider), the amount, and the frequency (e.g., monthly).
2. Automatic execution: On the scheduled date, the delegable account, acting like a smart contract, would automatically initiate a transaction to pay the bill.
3. No manual signing each time: You wouldn’t need to manually approve each recurring payment. The initial setup grants permission for these automated transactions within defined parameters.

This is a significant step towards making crypto payments as seamless as traditional automated banking. Visa highlights the potential:

“This application could let a user set up a programmable payment instruction that can move money automatically from one self-custodial wallet account to another at regular intervals, without the user having to do anything each time.”

Benefits of Automated Crypto Payments

Why is this such a big deal? Automated crypto payments offer several compelling advantages:

• Convenience: Say goodbye to the hassle of manually paying recurring bills. Set it once and forget it, just like your traditional bank accounts.
• Wider Crypto Adoption: Making crypto payments easier and more user-friendly can encourage broader adoption by individuals and businesses.
• Self-Custody with Automation: Enjoy the security and control of self-custodial wallets without sacrificing the convenience of automated payments.
• Reduced Risk of Missed Payments: Automation minimizes the chance of forgetting to pay bills on time, potentially avoiding late fees or service disruptions.

Challenges and Considerations

While the vision is exciting, there are challenges to overcome before automated crypto payments become mainstream:

• Implementation Complexity: Account Abstraction is not yet widely implemented on Ethereum. It requires significant protocol changes and robust security measures.
• Security Guarantees: Ensuring the security of delegable accounts and preventing unauthorized transactions is paramount. Rigorous testing and security audits are essential.
• EIPs and Standardization: Account Abstraction has been proposed in multiple Ethereum Improvement Proposals (EIPs) but hasn’t been fully implemented yet. Standardization and community consensus are needed.
• Current Stage: Visa acknowledges that their delegable account concept is still in the experimental phase. They’ve tested it on a private chain using StarkNet, a Layer 2 scaling solution that supports AA.

Centralized Exchanges vs. Self-Custodial Wallets: Why Self-Custody Matters

You might be thinking, “Can’t I already automate payments through centralized crypto exchanges?” Yes, some exchanges offer features for recurring buys or scheduled transfers. However, relying on centralized platforms for automated payments comes with significant risks, as highlighted by the recent turmoil in the crypto space.

The failures of FTX, Voyager, BlockFi, and Celsius in 2022 underscored the risks of trusting centralized entities with your crypto. When you use a centralized exchange, you essentially entrust them with custody of your funds. If the exchange faces financial difficulties or security breaches, your funds could be at risk.

Self-custodial wallets, on the other hand, put you in complete control of your private keys and your crypto assets. Visa’s proposal for automated payments through delegable accounts aims to bring the convenience of automation to the safer, self-custodial realm.

Looking Ahead: The Future of Crypto Payments

Visa’s exploration of automated crypto payments is a strong signal of the growing maturity of the crypto space. While still in its early stages, the concept of delegable accounts and Account Abstraction holds immense potential to transform how we use cryptocurrency for everyday transactions.

As blockchain technology evolves and solutions like StarkNet gain traction, the vision of seamless, automated crypto payments within self-custodial wallets is becoming increasingly realistic. This could pave the way for wider crypto adoption and a future where managing your digital finances is as convenient and secure as managing your traditional finances.

The journey towards truly user-friendly crypto payments is ongoing, but initiatives like Visa’s delegable accounts are crucial steps in the right direction. Keep an eye on developments in Account Abstraction and Layer 2 scaling solutions – they could be key to unlocking the next wave of crypto innovation and making digital currencies truly accessible to everyone.