The great news that Visa Inc. is going to settle USD Coin transactions using Ethereum is definitely bullish – but what will it affect network scaling and business?
Visa announced on March 29 that the Circle USD Coin will be used for settling its network transactions.
On the Crypto.com platform, Visa hurls a pilot of the Ethereum network
David Hoffman published his latest Bankless DeFi newsletter “Visa is paying ETH holders” in response to the big news.
He explains how Visa is able to measure USDC payments on Ethereum through its own payment network, which can process 1,500 transactions per second.
Ultra Sound Money
Hoffman notes that only a centralized service provider can offer Visa’s scaling capacity at this time. Commenting on a similar operation to Layer 2, which lots and process transactions off the main chain;
“Thousands of transactions can happen internally on Visa’s network, and then Visa can make a single, batched transaction to Ethereum that updates the balances of its partners that leverage Visa for USDC transfers.”
While Ethereum is not directly large, the premise that ETH is “ultra sound money” is still reinforced.
The blog post then suggests how “the Fed’s rugged development” might be perceived. The US dollar and the Federal Reserve have a monopoly, because greenback is the global reserve currency and the Fed controls the ledger, he said.
Visa USDC settlement does not change this in Ethereum. The Fed is restored to all dollars. However, much economic activity has been moved to the Ethereum ecosystem.
Visa is simply an asset-free settlement platform. Then future integrations with Decentralized Stablecoins such as DAI and even WBTC could be possible when things are growing across cryptobanks and USDC.
Ethereum Price Reaction
The prices of the Ethereum reacted to the news with a pump of 8% to a high of $1,830. Though on Tuesday morning prices have slightly cooled, the assets are still 5.7% higher every day. According to CoinGecko, ETH changed hands at $1,804 at press time.
Since early 2021, ETH prices have increased by 142 percent. Bitcoin, which has gone around 97 percent in the same period, is even superior.
