Universal Payment Channels: An Interoperability Platform for Digital Currencies

Categories : Cryptocurrency & blockchain, Technology and Operational Enablers


With the innovation of distributed ledger technology (DLT), often known as blockchain technology, there has been significant growth of digital tokens in the form of cryptocurrencies, stablecoins, and central bank digital currencies. As the number of DLT networks increases, each with varying design characteristics, the likelihood that transacting parties are on the same network decreases. Thus, it is crucial to facilitate payments that are universal across networks, scalable to massive loads, and highly available. This paper discusses a future payment network that may be built on top of DLT networks without being subject to their limitations on interoperability, scalability, and availability faced by DLT payment solutions today. Specifically, the authors propose a hub-and-spoke payment route, referred to here as Universal Payment Channels (UPC), that can be used to support digital token transfers of funds across different networks through payment channels