Visa Settlements Enhance ETH as ‘Ultra Sound Money’
2 min readThe big news that Visa Inc. will be settling transactions for USD Coin using ETH is no doubt bullish — but what impact will it have on network scaling and the economy?
On March 29, global payments company Visa announced the use of Circle’s USD Coin to settle transactions on its network. Visa is launching a pilot program with the Crypto.com platform, which will settle payments over the ETH network.
In reaction to the big news, David Hoffman penned his latest Bankless DeFi newsletter titled “Visa is going to pay ETH holders.”
He explains how Visa using its own payments network, which can process 1,500 transactions per second, is a way to scale USDC payments on ETH.
Today on @BanklessHQ:
"Visa is going to pay ETH holders"@Visa is buying #ETH block-space to settle USDC payments
This is how we 'Rug the Fed'
First USDC…then… something else?$DAI?$RAI??
Meanwhile, burning $ETH with every transaction
— Ξ
DavidHoffman.eth
DavidHoffman.eth 
(@TrustlessState) Ultra Sound Money
Hoffman notes that Visa’s scaling capacity is only something a centralized service provider can offer at the moment. In a similar operation to Layer 2 rollups, which batch transactions into one and process them off the main chain, he commented;
“Thousands of transactions can happen internally on Visa’s network, and then Visa can make a single, batched transaction to ETH that updates the balances of its partners that leverage Visa for USDC transfers.”
While this does not directly scale ETH, it reinforces the premise that ETH is “ultra sound money.”
The blog post goes on to suggest how the development could be seen as “rugging the Fed.” The Federal Reserve and the U.S. Dollar have a monopoly as the greenback is the world’s reserve currency, and the Fed controls the ledger, he noted.
Visa settling USDC on ETH does not change this. All dollars settle back to the Fed. However, it does move a great deal of economic activity into the ETH ecosystem.
Visa is just a settlement platform without its own asset. So, when things grow beyond crypto banks and USDC there could be future integrations with decentralized stablecoins such as DAI or even wBTC.
There is much in store for ETH developments in the coming year:
ETH Price Reaction
ETH prices reacted to the news with an 8% pump to reach an intraday high of $1,830. Although prices have cooled off a little on Tuesday morning, the asset is still up 5.7% on the day. ETH was changing hands at $1,804 at the time of press, according to CoinGecko.
ETH prices have made 142% since the beginning of 2021. It’s even outperformed BTC, which has made around 97% over the same period.
The post Visa Settlements Enhance ETH as ‘Ultra Sound Money’ appeared first on BeInCrypto.
