Crypto users will one day be able to automatically pay their electricity and phone bills through their self-custodial crypto wallets, according to payment giant Visa.
In a December 20 blog post, Visa's crypto thought leadership team proposed a solution that would allow providers to automatically "pull" funds from users' Ethereum-powered crypto wallets, without requiring the user to manually close each transaction.
Automatic payments for recurring bills are common in the traditional banking world, giving users the ability to allow certain service providers to withdraw money from their chosen bank accounts to pay bills, such as a Netflix subscription or a monthly phone bill. .
Such a mechanism is not possible for owners of self-custody wallets, Visa said, noting that automated programmable payments that pull payments from a user's account at recurring intervals "requires engineering work."
This is because, in self-custody wallets, the user is the only person in control of the private keys, which means they must manually sign transactions as "a smart contract cannot initiate transactions on its own." .
In his technical piece, Visa said Automatic recurring payments via crypto would be possible through a new type of self-custodial wallet called โdelegable accountsโ, which is based on the concept of โAccount Abstractionโ (AA).
Ethereum co-founder Vitalik Butering introduced the concept in 2015, which essentially allows Ethereum-based wallets and smart contracts to be combined into a single account between other use cases.
Through an AA-based self-custody wallet or delegated account, the Visa team claims that user accounts would "work like smart contracts," meaning people can schedule transactions without logging out to initiate each transaction.
โThis application could allow a user to set up a programmable payment instruction that can automatically send funds from one self-custodial wallet account to another at recurring intervals, without requiring active user participation each time,โ the post reads.
The proposal is part of the cryptocurrency friendly company wider investigate on new avenues for blockchain innovation and working around hard-coded requirements in Ethereum transactions."
AA has many potential use cases, especially on how the user experience on a digital wallet can be substantially improved with more flexibility built into the user account to function more like a smart contract.
โ Catalina Gu (@catgu_) December 19, 2022
The team admits that while automatic payments can be relatively easily integrated via wallets hosted by other parties, such as exchanges, this of course means that the user would have to trust such parties to manage their funds properly. .
This proved to be a significant risk this year, especially given the FTX bankruptciesVoyager, BlockFi and centigrade to name a few.
Related: Ethereum bulls wake up after four years to transfer 22,982 ETH
The post also highlights that AA has been proposed as part of multiple Ethereum Improvement Proposals (EIPs) over the years, but has ultimately not been carried out due to its difficulty of implementation. This is because it requires a lot of protocol changes and "security guarantees that must be met".
The Visa team stated that it has already successfully tested its delegable accounts on a private chain of the layer two scaling solution StarkNet, as the network is AA compliant.
As such, the post concludes that automatic payments are not far off given that he was able to implement delegable accounts within StarkNets' "account model."
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