For Libra — the digital currency backed by Facebook and a consortium of enterprises — will speed make a difference toward adoption (if it ever launches)?
A new white paper from Mathieu Baudet, George Danezis and Alberto Sonnino — a trio affiliated with Facebook’s Novi wallet — says a proposed payment system targeting real-time gross-settlement functionality would be multiples faster than the Visa system.
“FastPay allows a set of distributed authorities, some of which are Byzantine, to maintain a high-integrity and availability settlement system for pre-funded payments,” according to the paper. Libra, ostensibly, could be one of the digital currencies that could cross FastPay (along with bitcoin and others).
Digging into the white paper, the researchers state that FastPay exists as a means to settle transactions across real-time gross-settlement functions. The goal would be to settle crypto payments and also support fiat transactions.
The system involves two sets of stakeholders: authorities and account holders.
“Real-time gross settlement systems are the backbone of modern financial systems,” according to the paper. “Commercial banks use them to maintain an account with central banks and settle large value payments.” But RTGS systems are limited in their capacity making them unsuitable for settling low-value high-volume retail payments directly.
In reference to speed and volume, the white paper says the system has been able to facilitate more than 80,000 transactions per second. Those transactions, noted the paper, took place across 20 payments authorities — surpassing the requirements of current retail card payment networks, while significantly increasing their robustness.
FastPay’s speed means the system is applicable to point of sale payments, too, according to the paper.
“FastPay can be deployed in a number of settings,” the authors wrote. “First, it may be used as a settlement layer for a native token and cryptocurrency, in a standalone fashion. Second, it may be deployed as a side chain of another cryptocurrency, or as a high-performance settlement layer on the side of an established RTGS to settle fiat retail payments.”
